MELBOURNE, July 28 (Reuters) - China's soybean reserves may
be less than many market estimates because stocks are poorly
reported or are spoiling inside rundown storage facilities, a
leading U.S. agribusiness consultant said on Tuesday.
Rick Gilmore, president of Virginia-based GiC Group, said he
had anecdotal evidence indicating that Chinese reserves, which
have a big influence on world soybean prices, could be
significantly over-estimated.
Gilmore declined to be specific, citing sensitivities as his
firm operates in China, which he described as a wild card in the
international soybean marketplace: a keen buyer if the price was
right but its import needs were difficult to pin down.
"There's a variance of views as to what the storage situation
is," he told Reuters on the sidelines of a grains conference.
"We really don't know what the level of reserves are -- the
commonspeak is that they're building up stocks but as a bit of a
contrarian I would say that might not the case," said Gilmore.
China, the world's largest importer of soybeans for use in
animal feed and for human consumption, has about 6 million tonnes
of reserves held by the state, according to trade estimates.
Gilmore said there were a variety of reasons why stocks might
be lower than thought, noting they might have been overstated to
influence prices and that stocks held in rural areas might have
deteriorated beyond use because of poor storage facilities.
"It is actually a state secret how much the stocks are,"
Gilmore added.
While grain storage facilities at key Chinese ports are
modern, traders say those in the interior can be very basic,
offering little protection against the weather.
Gilmore said the market was still guessing if China would
remain a big importer of beans, mainly from the United States.
He said China's buying of U.S. soybeans in April and May had
boosted U.S. soybeans prices, leading to hopes of sustained
higher prices, but those hopes were crushed by Chinese importers
cancelling orders then re-entering the market at lower prices.
Soybean futures prices <Sc1> on the Chicago Board of Trade
surged as much as 30 percent in the first half of this year, but
slipped back early this month.
"The big question is what China is doing," Gilmore said.
"They've been buying old crop, selling from their reserves
(and) there's been official reports of speculation in China way
exceeding what the demand requirements are, so it creates an
element of uncertainty."
"I think it is symptomatic of Chinese procurement practices,"
he added.
Ultimately, he said, China was price sensitive and was prone
to back off imports if prices were deemed too high.
"There's an ability to tighten the belt in China if it needs
to, so I don't think there will be any sustained spike up."
Soybeans prices have been propped up in recent weeks by tight
old crop supplies in the United States due to demand from China
and reduced South American stocks because of drought.
China's soybeans imports this year are more than 40 percent
above the level a year ago.
But new crop supplies could reverse the situation. The U.S.
appears to be poised to harvest its largest soybean crop in
history in 2009. The United States Department of Agriculture is
forecasting a crop of 3.26 billion bushels or 88.723 million
tonnes.
(Reporting by Bruce Hextall; Editing by Mark Bendeich)
|
