Global commodity markets will have mixed fortunes in 2006, with China prepared to surpass India as the world's largest importer of edible oil, according to ASA's latest report.
China National Cereals, Oils and Foodstuff Corporation (Cofco) is expected to merge with China Grains and Oils Group (CGOG) to form a company with total assets of $7.43 billion.
According to a report from the China Business News, the state-owned Assets Supervision and Administration Commission has given the go-ahead for the merger and it is expected to be announced soon.
The merger of Cofco and CGOG is apparently aimed at boosting the combined company's competitiveness against global grain and oils heavyweights.
Meanwhile, China's Dalian Commodity Exchange has decided to launch trade in the country's first soy oil futures this week. Soyoil futures will become the second commodity futures to be launched this year, after trading in sugar futures began trading 6 January on the Zhengzhou Commodity Exchange.
Despite good availability in domestic markets, India's imports of vegetable oil in November rose to 327,585 tonnes from 316,426 tonnes in the same month of 2004.
Imports of refined oils were pegged at 11,248 tonnes in November down from 23,889 tonnes in November 2004, but crude oils were reported at 316,337 tonnes against 292,537 tonnes during that month last year.
Edible oil imports are expected to remain flat at around 4.8m tonnes for 2005, due to a projected bumper harvest of oilseeds. Analysts estimate that another two years of similar oilseeds production could see China surpass India as the world's largest importer of edible oil.
The Brazilian Census Bureau (IBGE) said last week the nation would harvest an estimated 59.2 million tonnes of soybeans in 2005-06, up from 51.1 million tonnes in 2004-05.
According to the American Soy Association (ASA), IBGE said soy production will grow by roughly 15.8 per cent over the 2004-05 harvest, but planted area will be only 23 million hectares because of crop losses due to dry weather in the previous season that ultimately added to liquidity problems on Brazilian soy farms.
USDA estimates are somewhat more optimistic. The agency believes that Brazil's soybean production could be 61 million tonnes with an expected yield of 2.8 tonnes per hectare.
USDA also expects a 4 per cent drop in area dedicated to soybeans in 2005-06.
Asian rust pf course is another factor that could determine the success of Brazil's crop. USDA reports that small and medium-sized farmers may be out of the cash needed to spray if rust attacks.
Asian soybean rust was first found in Brazil in 2002 and has since spread to Brazil's major soy regions. Since then, Brazilian farmers have lost an estimated $2 billion annually fighting the fungus.
The ASA represents 27,000 US soybean producers, and has a strong focus on policy development and implementation.