By Naveen Thukral and Zheng Xiaolu

SINGAPORE/BEIJING, Aug 31 (Reuters) - China's soybean
imports are likely to slow from their recent record monthly
pace, as costly imported beans turn crushers' margins negative
and the potential for sales from state reserves looms over the

Higher prices for U.S. beans and expensive ocean freight
have raised the cost of imports, while sales from state
reserves could be needed to make room for the harvest from

A slowdown from the near 17 percent increase in soybean
imports in the first half of the year would weigh on Chicago
Board of Trade futures, given that China buys more than half of
the world's traded soybeans.

"If we were to see subdued Chinese buying in the soybean
market, it will certainly have a negative impact," said Doug
Whitehead, a commodities analyst at Rabobank in London.

"You might see the expensive U.S. basis decline, and if it
continues to decline then you could start to see an impact on
the futures market."

Traders said besides rising outright prices -- front-month
CBOT soybeans are up 11 percent from June lows -- soybean
premiums at U.S. Gulf ports have doubled to $1.20 a bushel
above the November CBOT contract, from around $0.50 to $0.60 a
bushel in April, as farmers hold on to stocks.

Freight rates have jumped 25 to 30 percent since June to
around $66 to $68 a tonne for a panamax vessel carrying beans
from U.S. ports to China, grains traders said, lifting the cost
of imported soy in China.
"If we buy beans now for shipment in October and mark it
against spot soymeal and soyoil, we get a negative crush margin
of 100 to 150 yuan," said a trading manager at a global trading
company in Singapore, which runs soy processing facilities in

"It will discourage people and we will not see the madness
there was in June," he added, referring to record soy imports
of 6.2 million tonnes that month.


Still, China is expected to import between 4 and 5 million
tonnes of soybean a month in the last quarter of this year to
feed strong consumption during the coming winter holidays,
traders said.

"Feedmeal demand has been improving in the third quarter
compared with the first half of the year, and consumption will
grow further in the last quarter due to year-end holidays,"
said an official at the China Feed Industry Association.

The increasing wealth and urbanisation of China is fuelling
consumption of higher-protein foods like meat, production of
which requires still greater volumes of high-protein grains,
particularly soybean.

China's 1.3 billion people consume nearly half the world's
annual pork production of around 106 million tonnes in 2009,
according to the U.N.'s Food and Agriculture Organisation.

Soybeans are crushed to make soymeal, a key ingredient for
feeding pigs, chickens and fish, and soyoil, which is mainly
used as a cooking oil.

Domestic soyoil prices on the Dalian futures exchange
climbed to a 23-month top on Aug. 16, lifted by speculative
buying amid prospects of firm demand.

But talk of the government releasing its soybean and
vegetable oil stockpiles pulled the benchmark contract down
more than 2 percent on Aug. 20, highlighting the sensitivity
surrounding state reserves sales.

The government's silos are packed to capacity with around 5
million to 6 million tonnes of soybeans, about 1.4 million
tonnes of soyoil and more than 1.5 million tonnes of rapeseed
oil, according to traders' estimates.

"If the government has to continue its stockpiling
programme, it has to release some stocks to empty the silos,
which are now filled to capacity," said Sun Hongyuan, an
analyst with Great Wall Futures Corporation Ltd.

Besides state stockpiles, soybean stocks at China's ports
have swelled to around 5.5 million tonnes, roughly one month's
import requirements, versus the usual level of around 4 million

China's soybean production is estimated around 15 million
tonnes, up from 14.7 million tonnes last year, according to

"Due to erratic weather that was unsuitable for corn
growing, farmers in northeastern China switched to soybeans,
resulting in revision in soybean output figures from 14 million
tonnes to 15 million tonnes this year," said an oil analyst
with a Shanghai-based brokerage.
(Additional reporting by Angie Teo in KUALA LUMPUR; Editing by
Michael Urquhart)