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Soybean imports set to rise

(China Daily/Agencies)
Updated: 2009-09-25 08:29

China's soybean imports are set to rise substantially in the next few years, an executive at commodities trader Noble Group said yesterday.

Jaime Teke, global head of structured finance at the firm, which this week agreed an $850-million equity investment from Chinese sovereign wealth fund China Investment Corp (CIC), said China had little room to increase its own soybean crop.

"We don't see the conditions are right here in China," he told Reuters on the sidelines of the Latin America China Investors Forum in Beijing. "One of the big problems is irrigation. Definitely, imports of soybeans from Brazil and Argentina will rise substantially.

"China has no water. What we are doing essentially is importing water in the form of soybeans and grains."

Noble has two soy crushing plants with 3 million tons of capacity in China, around 12 percent of the market, Teke said.

Despite the deal with China Investment Corp, which now holds 14.5 percent of the trading company, Noble is not yet planning to expand its soy business in China, the world's biggest importer of the crop.

Related readings:  CIC purchases 15% stake in Noble Group  China's CIC wealth fund muscles up as markets recover

"We would like to expand but we're not allowed to," Teke said.

This year China is expected to import about 40 million tons of soybeans, mainly from the United States, Brazil and Argentina. The volume of imports dwarfs China's own harvest of around 15 million tons.

Meanwhile, the Singapore-listed firm rose as much as 13 percent yesterday, in its first day of trade after a week-long suspension.

Noble, which is based in Hong Kong, announced on Tuesday that CIC would buy a 14.5-percent stake for $850 million.

OCBC Securities Lee Wen Ching said CIC's investment would cement Noble's presence in China, where tremendous growth potential exists, and provides the firm with funds for more investment opportunities.

Noble "was not in need of additional capital given its strong cash position of $805.8 million and low gearing of just 0.15 times after adjusting for readily marketable inventories," she said.