by Agrimoney.com
US foreign staff stoked the growing doubts over Washington forecasts of a 10m-tonne jump in China's soybean imports, flagging a hit from bird flu, in a report which raised fresh concerns over official Beijing crop statistics.
US Department of Agriculture foreign staff in Beijing forecast that Chinese soybean imports would show a strong rebound in 2013-14, citing "escalating growth in soymeal use and edible oil consumption".
However, their estimates for imports, at a record 67.5m tonnes, fell 1.5m tonnes short of the official USDA forecast, which has been widely questioned by analysts as too generous given pressures on profitability for soybean processors.
In fact, analysts on average foresee Chinese soybean imports - which are closely watched by investors, given the country's status as the top buyer – reaching 63m tonnes in 2013-14, according to a Bloomberg survey.
Shanghai JC Intelligence, a respected local analysis group, estimated the figure at 60.5m tonnes, saying that the USDA has "grossly overestimated China's demand" for soybeans.
'Flock destruction'
Demand for soymeal, the feed derived from soybeans, from poultry plants has been curtailed by the knock-on effects of the bird flu epidemic on chicken meat consumption.
The outbreak "weakened demand as flock destruction and consumer distrust of poultry products cooled poultry feed demands", the USDA staff said.
"Poultry meat and egg consumption is down since late March with many poultry farms, in particular those selling live birds, and some parent stock farms forced to dispose of breeding eggs and chicks due to slow demand."
Chinese hog producers are suffering negative margins too, of some 180-250 yuan ($29-40) per animal in March and April, thanks to "stagnant consumption" which, given the dearth of improvement during early-May holidays, "may continue in the near term".
Running at a loss
The USDA staff flagged hopes for better times ahead for China's hog sector, that "industry insiders expect a slight rise in pork production/consumption in 2013, which should partially offset the reduction in soymeal use for poultry".
Nonetheless, for now, Chinese soybean crush margins remain negative, by roughly 20 yuan per tonne, if an improvement on April levels above 40 yuan per tonne, according to Morgan Stanley.
The arbitrage for importing US supplies, open for most of the October-to-May period, has closed for private buyers, which pay VAT, the bank's data show.
Data concerns
The USDA staff also raised fresh concerns over Chinese crop data, which are often seen as overestimating production, thanks to a subsidy system which rewards regional authorities by output.
Unexpectedly strong crop prices in China, most recently for wheat, are viewed as a sign that official data showing ample supplies may be too generous.
This time, concerns centred on rapeseed data, for which data from provincial agriculture offices showing rises in planted area of some 2%, spurring an estimate from China's CNGOIC crop bureau of a 14.1m-tonne crop, may be too generous.
'Over-inflated numbers'
"Some non-governmental sources question these optimistic numbers," the USDA bureau said.
"Although the 2013-14 rapeseed yield is reportedly above average due to good weather conditions in major productions regions, such as Hunan and Sichuan, some experts criticise the planted area increases in Hubei, Sichuan and Jiangsu as being over-inflated to capture additional government subsidies.
"One Hunan crusher argued that Hunan rapeseed planted area could be more than 40% lower than the official area."
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