Despite surging soybean prices China’s imports for the month of July rose 4.4% over June for a two-year high of 5.87 million tons, according to customs data.
The rate of growth for July is considerably lower than during the first seven months of 2012 when China’s soybean imports jumped 20.1% year-on-year to 34.92 million tons. July’s imports were the highest level since June 2010.
The import surge was due to the desire of major food processors to take advantage of global prices that were lower during the first have than they were during 2011. However, prices began rising in June as US farmers face the worst drought in over a half century. The most recent prices for soybean contracts on the Chicago Board of Trade are 30% higher than at the beginning of June.
China has imported about 80% of its soybean demand because imports are cheaper than domestically produced soybeans. The US is the world’s leading exporter of soybeans, as well as of wheat and corn. However, the proportion imported from the US has been declining, falling below 700,000 tons in June for the first time.
In coming months as soybean prices continue to rise China is likely to continue reducing imports from the US and seek to meet more of its demand from countries like Brazil and Argentina as well as from an expected release of supplies held in reserve by the central government. Beginning in October domestic soybean production will be traded through a commodities market, enhancing efficiency and ultimately boosting production.