BEIJING/SINGAPORE, Nov 16 (Reuters) - Chinese importers have canceled orders for about 600,000 tonnes of U.S. soybeans, an official think-tank said on Friday, as weak domestic demand and a recent drop in prices made these purchases unprofitable.
The cancellation of cargoes by China, the world's top buyer, will weigh on Chicago futures which have already dropped more than 20 percent since hitting a record high of $17.94-3/4 a bushel on Sept. 5.
The China National Grain and Oils Information Center (CNGOIC) did not say when the orders, equivalent to 10 cargoes, were canceled but said they were for delivery in December and January, indicating that they had been booked long before the recent drop in prices.
"Crush margins in China are under pressure. Prices have come down significantly from the highs and beans that were bought when prices were $2 or $3 (per bushel) higher may not work in the current product price environment," said Anne Frick, oilseeds analyst with Jefferies Bache.
"There probably was some component of insurance buying in case of problems in South America, but weather is looking a little more favorable for the South American crop," she said.
EXPENSIVE BEANS, NEGATIVE MARGINS
The increase in import prices has contributed to the losses of the soybean crushing industry, which is also grappling with overcapacity and a decline in domestic demand for products such as soyoil and soymeal.
"Crushers are running at a heavy loss while domestic demand for soyoil and meal remains sluggish, and this situation may not improve later," the CNGOIC said in report
Beijing's stockpiling of domestic soybeans and a poor harvest have pushed up prices of local soybeans, forcing some crushers in the northeast to close down their plants for more than 15 days a month.
Chinese processors are trying to get out of the import deals as they had bought before prices started declining, traders said.
The CNGOIC report estimated China's 2012 soy imports at a record high of 58 million tonnes, a 10 percent increase from a year ago. December and November imports were expected to rise to a higher-than-expected 10 million tonnes, the CNGOIC said.
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