8/20/04, CHINA (Oilmandi) - China, the world's top soyabean buyer, hasstruck deals to import more than two million tonnes of the oilseed fromthe new US crop but purchases could slow as Beijing takes steps to tightencredit and limit expansion of crushing capacities, a senior US tradeofficial said.

In addition to that, a bird flu outbreak has dampened sales prospects in ayear when the US is heading for a record soyabean crop of about 2.9bnbushels, said Criss Davis, chairman of the US-based United Soyabean Board.We already have significant sales to China on the books from the new crop,Mr Davis said late on Wednesday on the sidelines on a regional grainsconference and added. But the capacity expansion might not continue in thesame pace as it was continuing for some time in China. They have moved toslow down their pace of growth as they were afraid of inflation. Ipersonally see China’s imports down.

Shipments from the new US crop will start from October. China NationalGrain and Oils Information Centre, the official think-tank, estimates thedomestic Chinese soyabean crop to hit a record 18m tonnes this year due tofavourable weather and expanded acreage.

Davis said that might also keep a lid on China’s purchases from overseasfor some time. China’s soyabean cycle coincides with ours. That could havean impact also.

China imported close to 17m tonnes of soyabeans in ’03-04. In the firstseven months of ’04, China’s soyabean imports were down 12.1% to 10.8mtonnes, according to customs figures.

Since April, Chinese crushers have cancelled or defaulted on contracts forabout three million tonnes of high-priced South American soyabeans afterBeijing’s credit curbs and months of negative crushing margins.

Davis said he feared that the defaults might also prompt other buyers inthe region to do the same, adding that there was an urgent need to look atthe contract clauses. I as a farmer was affected, he said, adding We can’thave a situation where contracts are not respected. The wash-outs are overbut the fallout is not done yet.

Adding to the bearish outlook was the outbreak of bird flu for the secondtime in Asia this year, which has kept soyabean and soyameal importers atbay. China, Indonesia, Vietnam and Thailand reported fresh outbreaks July,signalling that the virus was not going to disappear quickly.

It’s a difficult time in Southeast Asia. First it was high freight ratesand now we have the bird flu. It’s difficult for the industry to handle somany challenges. That has hurt demand, growth and opportunities.

On the soyameal outlook, Davis said China would be making efforts over thelong term to boost its imports to countries such as Japan and other Asiannations.

That will provide competition to India and others. Their exports willparticularly be a problem for the crushing industries in other countrieswhich are not as efficient as those in China, he added.