China's voracious appetite for foreign soybeans looks set to continue for now, thanks to the cheapness of imports compared with domestic supplies, Washington has said.

However, the comments failed to prevent a 3.2% slide in Chicago soybean prices to a two-month low, undermined by raised US Department of Agriculture estimates for US and global oilseed supplies as well as tumbling grain markets.

As long as processing margins for imported soybeans remained high "China's soybean imports are expected to remain strong", the USDA said, highlighting a widening gap in profitability between crushing foreign or domestic crop.

Profitability gap 

Margins for Shanghai processors crushing imported soybeans were, at $75 a tonne, triple those in mid-November.

"This explains the large purchases of US soybeans that China has made in recent months," the USDA said.

However, margins on soybeans bought through China's Dalian exchange have shown a "significant decline beginning in mid-December", falling from about $55 a tonne to a loss at the start of 2010.

"[This] further encourages imports," the USDA said, raising its forecasts for Chinese soybean imports by 1.0m tonnes to 42.0m tonnes, and for US soybean exports by 1.0m tonnes to a record 37.4m tonnes.

Price slide 

The analysis follows considerable speculation over the durability of Chinese imports of US soybeans, given the amount it has already purchased and the potential for buying from South America, where the 2009-10 harvest has just begun.

However, the comments were overshadowed by collapses in corn and wheat prices, and by separate data showing a 3.0m-tonne rise to 431.6m tonnes in the USDA's estimate for global oilseed production in 2009-10.

The increase was led by a 2.0m-tonne increase to 65m tonnes in the departments forecast for output in Brazil, America's closest rival in the soybean export market.