China's "broadly softer" agricultural imports last month do not reflect a structural drop in its need for foreign farm commodities, commentators said, as the country purchased further US soybeans, taking total orders in a week to nearly 3.2m tonnes.
Chinese customs data on Tuesday showed declines month on month, in January imports of many crop imports, including a 2% drop in wheat buy-ins, a 33% slump in palm oil, 59% slide in cotton, and 71% plunge in sugar imports.
However, the falls in these "broadly softer" statistics were in part down to comparison with "very elevated" imports in December, Sudakshina Unnikrishnan at Barclays Capital said.
China's appetite for farm commodities was evident in state stockpiling drives for the likes of corn, cotton and sugar, programmes which "bode well for import demand, especially as strong underlying consumption trends remain in place", Ms Unnikrishnan said.
Calendar effect
The comments came the day after Rabobank warned that January Chinese trade data might be skewed by the early occurrence of the lunar new year, and its celebrations, in 2012.
Last year, China's new year fell in February.
Rabobank stuck by a forecast for 2011-12 Chinese soybean imports of 56.5m tonnes, 1.0m tonnes higher than the US Department of Agriculture estimate, while highlighting that the gap between Dalian and Chicago corn futures had reached "the kind of elevated levels that have historically encouraged imports".
Morgan Stanley on Tuesday estimated the arbitrage for Chinese consumers buying corn from the US, rather than locally, at $1.20 a bushel for VAT-free state enterprises, and $0.10 per bushel for other users.
Crush margins recover
Indeed, with South American production of many agricultural commodities disappointing in 2011-12, it is the US which seems likely to be a major beneficiary of China's appetite.
"As Chinese soybean crush margins continue to trend upwards towards breakeven, US soybean export prospects look rosy," Morgan Stanley said.
Chinese crush margins, which fell to a negative 500 yuan a tonne late last year, have recovered nearly all that ground since.
Separately, the USDA confirmed a further soybean sale, of 250,000 tonnes, to China, taking the total reported through its daily reporting system, which picks up larger orders only, to 3.17m tonnes in the last week.
"Soybeans are likely to steal the spotlight" in the USDA's next weekly export sales data, on Friday, Morgan Stanley said.
'Import reliance'
Ms Unnikrishnan highlighted that corn had bucked the weak trend in Chinese crop imports last month, hitting 751,000 tonnes, a rise of nearly one-third month-on-month, and 39,889% year on year.
"Corn has been a market in which China's import reliance has risen sharply and for 2011 as a whole, the country was a net corn importer, of 1.617m tonnes," she said.
"Despite expectations of a record harvest, imports have been firm over recent months."
Broker US Commodities said: "The corn imports were larger than expected and the highest in months."
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