China, the world's top soya importer, is shunning high-priced March cargoes from the United States as persistent talk of bird flu in the south douses hopes for a strong recovery in poultry demand. Traders said on Tuesday Chinese crushers were waiting for lower-priced South American cargoes to become even cheaper as farmers in Brazil began harvesting yet another record crop which should become available for shipment after late March.

"Nobody is talking about March any more. A lot of people are skipping March because the invoice is too heavy," said an official at a crusher in southern China.

"I would be very surprised if they (the US) can register sales of more than 200,000 tonnes this week." The traders said US cargoes for March shipment were offered at premiums around 225-230 US cents per bushel over the Chicago March contract, including costs and freights.

This compared with South American cargoes, offered at about 190 US cents for shipment after late March, despite a jump from as low as 160 cents last week.

"Now nobody is very eager to buy. They expect prices to go down.

Currently the outlook for meal demand is not great," said a trader at an international house based in Shanghai.

"But interests are definitely shifting to South America." With Chinese Premier Wen Jiabao calling on Friday for all possible measures to fight bird flu, traders were nervous about a possible outbreak in China as its neighbour Vietnam wrangles to contain the disease that has killed 12 people.

"People were saying demand for birds in south China is as much as down by 20 percent, versus two years ago," said the industry official.

"There're a lot of talk in south China that it's already here, only not reported."

The traders said domestic soyameal prices in China were soft, except for the south, where major crushers were struggling with shipment delays of soya cargoes from the US Pacific Northwest.

In the southern province of Guangdong, soyameal prices stood at around 2,400 yuan ($289.9) a tonne as some major crushers were forced to wind down operations.

They ran out of the oilseed because of the shipment delays.

"In southern China, we don't have aggressive buyers," the official said. "This is a little bit different from what the rest of China is feeling."

In north and central China, meal prices slipped to below 2,300 yuan ($277.8) due to heavy arrivals of the oilseed from the United States and the producing north-east, while demand was weak ahead of the Lunar New Year holidays from February 7.

Copyright Reuters, 2005