January 11, 2011

China set for 5%-10% soy import growth in next five years

China's soy imports will likely expand 5%-10% a year over the next five years, with imports in 2011 around 54-55 million tonnes, the Chinese Grain Network said Monday (Jan 10).

Area planted to soy will fall this year, as it has in previous years, as farmers earn more by planting corn and rice, but will be mitigated by supportive government purchase policies, the consultancy said in a report.

Tight soy supplies will continue to underpin prices, but the government's ample soy reserves and high import levels will limit any gains, it said.

As of December 25, the government bought 925,400 tonnes of soy from farmers to replenish its reserves, it said, adding the minimum purchase price will likely be raised from this year's RMB3,800 (US$574)/tonne in 2011.

China may also regularise the auction of soy reserves to ensure market supply and stabilise prices, it said.

The government will put 300,000 tonnes of soy up for auction Tuesday. This will be the central government's first soy auction this year, after a provincial auction of about 190,000 tonnes of soy from Heilongjiang's reserves failed to attract any bids Friday.

China Grain Reserves Corp ended 2010 with about six million tonnes in its inventories, steady with end-2009, analysts said.

China's soy consumption in the crop year that began October 1 is forecast to grow 5% to 64 million tonnes, with demand from crushers accounting for about 49 million tonnes, the consultancy said.

The country's soy output in 2010 was about 15 million tonnes, steady with previous years.

Soy imports in December increased 14% from a year earlier to 5.43 million tonnes, which was down 1% from November, the General Administration of Customs said Monday. Imports in 2010 increased 29% to 54.8 million tonnes, the data showed.