China to keep stockpiling soy and corn in 2010

China will continue a policy of stockpiling corn, soy and rapeseed this year so as to support local farmers.

 

China will adopt a temporary stockpile policy on corn, soy and rapeseed among others at a proper time and support enterprises to participate in the stockpile programme, the document, labelled as the No.1 document of the central government on agricultural policy stated.

 

China, the world's largest soy importer, is likely to maintain strong imports this year as record harvests in the US and South America have made imports cheaper than the domestic crop.

 

The sharp fall of international soy prices coupled with strong domestic soy prices will lead crushers in the northeast to shift their purchases to overseas markets, said the China National Grain and Oils Information Centre (CNGOIC) in a report released on Monday (Feb 1).

 

The centre calculated South America soy for post-May shipment at about RMB3,400 (US$498.1) per tonne, 11% lower than domestic soy quoted in Harbin, the largest producing area.

 

Beijing's subsidies offered to some crushers of RMB160 (US$23) per tonne would allow purchases from at a price of RMB3,740 (US$548) per tonne from farmers.

 

Farmers, which harvested less due to drought damage, thought the prices were too low and were holding out for even higher prices.

 

The prices of soymeal and soyoil were pressured by low import costs of soy and crushers may not be willing to buy domestic soy which cannot generate good crushing margins even though they can get government subsidies, said analyst Liang Yong.

 

China has already booked more than 21 million tonnes of soy from the US, an unprecedented amount from the world's largest exporter, in the current marketing year.

 

Meanwhile, to ensure the country's food security, China will increase its subsidies to grain farmers, the document said.

 

Tang Renjian, the deputy director of the Office of Central Rural Work Leading Group, said the central government's support to rural areas, including infrastructure, will increase this year to RMB716.1 billion (US$104.9 billion).

 

The government also called for development and research on some genetically modified (GMO) strains with Chinese who own locally developed GMO varieties and speeding up the commercialisation of new GMO strains to address potential food shortages.

 

China has been cautious over trans-genetic technology, but it does not mean the technology will be blocked, said Tang.

 

It is definitely one of the solutions to apply innovative technology to resolve the problem of supply of agricultural products, which will be tight in future, he said.

 

For the first time last year, China approved phytase corn as being safe, which has paved the way for large-scale production in two to three years.