China's soy imports may top 40 million tonnes in 2009

 

 

 

"The government's purchases have resulted in a domestic supply decline of 3 million to 4 million tonnes," effectively taking this volume off the market with its price support programme, said Shen Enxian, an analyst with China International Futures Co.

 

The government is likely to use local soy it purchases as long-term state reserves, analysts said.

 

China Grain Reserves Corp. has offered to purchase a total of 6 million tonnes of local soy in northeastern producing areas since the 2008 harvest began in October, citing the protection of farmers' interests.

 

Analysts said the CGRC has bought 4 million tonnes of soy as of end-March, and as its purchases come to an end this month, it may not purchase much more - due to high moisture content of the crop.

 

Soy imports surged to more than 60 percent on year in February and March to 3.26 million and 3.86 million tonnes, respectively.

 

Processing plants in the northeast, which normally purchase local soy, have suspended operations. They have asked the government for subsidies to help them compete with processing plants located closer to ports that use imported soy, but industry participants said the government has refused their request.

 

The government isn't likely to sell the soy it has purchased in any significant volumes as prices aren't attractive, said Gao Yunyue, an analyst with Zhejiang Dadi Futures Brokerage.

 

Zeng Liying, deputy chief of the State Administration of Grain, said last week that the government will sell the soy at prices higher than they were purchased at, and is mulling more policies to support soybean, corn and rapeseed prices.

 

Soy imports in April are likely to remain high, with the Ministry of Commerce estimating 2.87 million tonnes based on importers' reports during March 16-31.

 

Soy imports last April were 2.39 million tonnes.