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Excessive imports of soybean industry in China in dilemma

Number of visits: Date:2014-05-14

Recently, the Chinese importers soybean contract default.Several experts in the economic information daily (weibo) reporter said in an interview, external dependency is too high, and China's lack of pricing power of soybean is the main reason for the recent China's soybean industry in an awkward situation.

The crisis

Importers in "default embarrassed"

The economic information daily, the reporter understands, in mid-april, domestic soybean importer defaults and a number of news came that the industry more than soybean importer could not be the l/c from the bank, cause to the port of soybean no money to pay, there are 500000 tons of soybeans a breach of contract, involves the amount of $300 million.

A the personage inside course of study tells a reporter, now, soybean importer defaults has only just begun.14 ship (panamax ships) facing default, among them 6 to 8 boat didn't open the l/c, another six to eight boat was floating on the sea, there are two or three default ten ship plan.A Panamanian cargo ship can usually 50000 to 60000 tons of soybeans, the total freight in 2 million tons of ship.

"Soybean surplus in June will be more serious, the early 2, excessive order of soybeans in Brazil and the United States in March with soybean arrived at Chinese ports, indigestion, Chinese buyers will be more serious."A trader told reporters.

Subsequent defaults will also be more serious, for import traders, as excess soybean imports, in the first quarter of this year, oil loss in 300 to 400 yuan per ton, compare, if in a default panamax ship loading of the goods and ship usually cost $3 million to $3.5 million deposit, but if use these high soybean oil at home, will only more economic loss.

Latest data released by China customs, port of soybean import in China in March 2014 to an average price of $585 / ton, the price rise in February 6 dollars/tons, for a third consecutive month-on-month rise, or to the port of tax payment cost about 4285 yuan/ton.

"The current market, we eat all the soybeans into the previous plans, loss is controlled in 200 million yuan, even so must the performance."Shandong dawn group chairman Shao Zhongyi admitted that soybean industry circle is very small, if default, will be blacklisted, upstream suppliers at the same time, it will destroy the relationship with the downstream customers, if you want to long-term operating soybeans, don't default.It is understood that the dawn group imported soybean 7.48 million tons for all of last year, ranked the first, accounting for 12% of the soybean imports to China.

Shao Zhongyi, said some traders in soybean circle, they would not rule out because can't afford to loss, would rather give up soybean business may default.Worries him is, in the soybean default crisis, some traders and soybean industry chain upstream and downstream of new customers, may affect the market supply and demand, thus affecting international soybean price.

In Shao Zhongyi view, soybean default crisis is rooted in China's lack of pricing power in soybean.Although China is the world's largest soybean importer, but there is no bargaining power, the United States is the global soybean real pricing center, production report regularly to the United States department of agriculture to become the vane of global soybean futures prices run.But the price volatility will eventually endanger the safety of food industry in China.

The problem

High external dependency

In fact, China's soybean has been very high external dependency.From the point of last year, China's soybean import account for 85% of the soybean supply the entire market, in the domestic distribution market, more than 90% of the soybean oil raw materials are imported soybeans.

A trader told reporters, unable to bear the force of "version" and some imported soybean cargoes were "washing", which is sold to other buyers, so that enterprises don't have to pay a fine.

Heilongjiang province soybean association deputy secretary-general Wang Xiaoyu in an interview with the economic information daily, reporter said, "washing" phenomenon is mainly due to China's demand for soybean and imports are not suited.In 1996, China imported 1.11 million tons of soybeans, to growth in 2013 to 63.37 million tons, rose more than 50 times, at the same time, China's oil demand did not grow so fast, there is excess imports phenomenon.

In 2013, the global soybean consumption is 2013 tons, China is 75.57 million tons, accounting for 28% of global consumption, at the same time with the global population is about 18%.Experts believe that China's actual demand for soybean should be around 50 million tons, the reality of our country soybean imports outstripped demand of more than 2000 ten thousand tonnes.Excessive imports also suppress the domestic soybean ascension space, also processing enterprises of coastal areas of profit caused a certain influence and obstacles.

In 2004, as an international trade pricing benchmark cbot soybean futures price volatility in the United States, many Chinese purchase of soybean crushers a high price.Since then, soyabean prices have plunged in some Chinese enterprises didn't shipped cif soybeans, enterprises have to support not bottom go to, especially the private enterprises is helpless to the default behavior, give up the original procurement contracts and deposit at high prices, foreign bargains.

Wang Xiaoyu believes that this year's default and the difference is part of the enterprise in 2004 adopted the "washing" behavior, this is a kind of international trade financing.But will import soybeans normal trade practices into financing is a kind of malignant profit method, is that Banks and other financial institutions don't want to see.

"Companies are not from processing the above to find a way to solve the problem of money, will have not the real economy."Wang Xiaoyu said the resale behavior at the same time increase the bank's potential financial risks, and the lack of effective regulation, should be a cause of relevant departments attach great importance to.

To deal with

More measures and for the pricing power

Shao Zhongyi thought, has the soybeans pricing power is more advantageous to maintain the domestic food security.Including subsidies to soybean importers, improve industry admittance threshold, strengthening the alliance of domestic enterprises and set up its own soybean futures trading institutions, attempt for soybeans pricing power, etc.

Shao Zhongyi said the country after the import links to symbolic subsidies, but he hopes to be able to increase subsidies or tax cuts, in order to improve the competitiveness of domestic soybean trader.At the same time, he suggested that free trade zone in Shanghai or other regions to establish a domestic agency, similar to the Chicago futures exchange in competition of soybean pricing power.Earlier, the United States is the world's largest exporter of soybeans, mastered the pricing power of soybean futures, but as countries such as Brazil, Argentina soybean production, exports, such as morning glory domestic importers of soybeans from Brazil, Argentina, mostly in domestic has a condition competition soybeans pricing power.

According to experts, in October 2008, because import soybeans occupy the pricing power, China introduced a temporary soybeans for purchasing price policy, the soybean industry in China for the pricing power of "first class", the purpose is to protect the interests of the soybean farmers, shorten the independent soybean industry is impacted by the international soybean price cycle and amplitude of time.But the reserve price objective will be affected by the international soybean price, function will be diluted.

Moreover, reserve policy has also failed to stabilise producing soybean acreage., according to data for producing soybean planting area in heilongjiang province in the past four years is like riding a rollercoaster fell sharply, from $2010 in 67.35 million down to 51.93 million mu, 2011 mu to 38.99 million mu in 2012, to $2013 by 31.05 million mu, a total of more than half were reduced.For farmers, soya problem of low profit remains unresolved.

In order to further for the voice, for the first time in 2014, the central file no. 1, will start the northeast and Inner Mongolia the soybean target price subsidies pilot.Target price subsidies, refers to the subsidies to low-income consumers in the market price is too high, the market price is lower than the target price according to the price subsidies to producers, effectively guarantee the farmers' income, improve the enthusiasm of farmers planting.

Wang Xiaoyu think, before more details on international soybean enterprise may take corresponding measures, such as international business policy might use the gap before the massive increase the soybean output in China, domestic soybean prices, leading to further reduce the domestic soybean planting.

Experts in an interview with the economic information daily, reporter said that climate brought in a target price subsidy system, may not be able to "a recruit the enemy".The ideal supporting policies, should be a set of from growing to processing, from processing to the circulation of the whole industrial chain of "combination".

Wang Xiaoyu said that if the target price subsidy policy can stabilize after planting area, raw material supply will ramp up, relevant departments or will take further measures to market, in order to promote processing enterprises in production, so in the face of the impact of international business, may not to do.

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