China is turning to competitively-priced South American soyabeans in an attempt to keep its costs to a minimum amid fears a new outbreak of bird flu may decimate demand for soyameal feed from poultry farmers. They said China, the world's top soya importer, would buy cheaper South American cargoes this season for March shipment onwards, along with only a couple of cargoes from the United States.
Chinese buyers have booked at least six South American cargoes since last week, when Brazil and China reached an agreement on quarantine issues for trade in soyabeans and soyaoil, they said.
Including purchases by those that organise vessels by themselves known as FOB buyers China should have on the books already more than one million tonnes of South American soyabeans from the new crop, to be harvested after March.
"They will stop buying US cargoes and they continue buying South American because of the price differences," said a trader at an international house based in Shanghai.
"In the past five days, they bought at least six South American cargoes, mostly for March and April."
The traders said while US cargoes were offered at premiums around 250 US cents per bushel for February shipment and 230 for March, including costs and freights, South American beans were seen at premiums of just 170-190 US cents.
The traders were worried about a possible outbreak of bird flu, which ravaged China's poultry industry, and meal demand, last year, especially as it followed the flu-like Sars epidemic the year before.
"It is pretty widespread already in Vietnam. So we think it is very, very possible it is here already," said one official at a crusher in southern China.
"The market is already bad in China so if this really happens, it is going to be another bloodbath."
A second trader in Shanghai added he had heard from farmers and crushing plants that there had been already some cases of bird flu in southern provinces of Young and Guangdong.
Officials at the Agriculture Ministry in Beijing and at the local government in Young, which borders Vietnam, denied there had been any outbreak in China so far this year. No comment was immediately available from Guangdong officials.
The traders said domestic soyameal prices turned soft at 2,300-2,400 yuan per tonne ($277.8-$289.9), with the peak consuming season seen already past in the run-up to the Lunar New Year celebration from February 7.
"Everybody is bearish on soyameal," said the second Shanghai trader.
"On top of bird flu, import volume has not been quite as small as people had expected."
One trader in Beijing agreed, adding that there was also talk that farmers in Heilongjiang, China's top soya producing province, still had more than 50 percent of their 2004 crop unsold.