Strong demand may force China to sell more soy reserves

A rise in soymeal demand in China has led to the country to increase its soy imports and triggered concerns the government may release more reserves into the domestic market, traders said on Wednesday (Apr 8).

Sinograin, the agency managing the state reserve, has sold about 100,000 tonnes of imported soy reserves last month to crushers, with the sales so far in the year amounting to about 500,000 tonnes. The agency currently holds about 2 million tonnes of imported soy and some 3.5 million tonnes of reserves.

Traders said Sinograin could release large quantities if prices rose to RMB3,700 (US$541.2) per tonne or higher which was the amount it paid farmers for domestic soy.

Over the past month, US soy imports were traded at more than RMB3,500 (US$512) per tonne in major Chinese ports after soymeal prices rose more than 17.8 percent.

Meanwhile, analysts and traders expect soy imports in March will reach 3.9 million tonnes, the highest level since October and a similar amount of imports is expected for April as well.

The strong imports were propelled by Beijing's procurement of domestic soy since late last year, which led to higher domestic prices over imported soy.

Despite being the purchase season for South American soy, traders in the US said China has shown renewed interest in expensive US soy for May-June shipment as the less expensive Brazil soy near-term shipping periods are sold out.