HONG KONG (Reuters) – Saddled with huge overcapacity and in dire need of consolidation, China’s soy-crushing industry may have turned a corner with the arrival of a top global player.
The world’s leading oilseed processor, Bunge Ltd., said last month it was acquiring its first plant in China to kick off an expansion in the world’s most populous country.
Though no other deals have yet been announced, traders and industry officials said many other Chinese soy crushers who are tight on cash following months of shrinking profitability, are looking for deep-pocketed foreign partners.
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There has been no sign that Beijing would rescue the industry wrestling with oversupply and a 40 percent jump in soy imports during the first seven months of this year.
In the past, the government has always found a way to slow soy imports at a time of a surplus, whether by new rules on GMO safety or by discovering chemical residues.
“I think this is the year for the consolidation,” said a senior trader at one of the world’s top trading houses. “Last year wasn’t. I haven’t seen the government intervene for the first time. This is a good sign.”
Traders predicted, however, that would take three to five years, if not more, to streamline the industry as new unexpected investors would always emerge in China to add to the confusion.
They also said so far they had seen little change following a soy disaster last year when Chinese buyers failed to pay for high-priced soy cargoes, causing international suppliers a combined loss of up to $300 million.
