June 9, 2004

China Soy Crushers To Cut Output To Boost Meal Price
 

China's biggest soybean processors agreed to cut production and coordinate buying on the Dalian Commodity Exchange in a bid to boost domestic soymeal prices, the government said.

The processors agreed to take the measures to help them pay for soybean cargoes en route to China, State Grain Administration affiliate China National Grain & Oils Information Center said in a report. China's buyers face legal action from suppliers after government efforts to reign in lending, part of a bid to slow the economy, left them unable to pay, it said in a report yesterday.

Soymeal for September delivery on the Dalian Commodity Exchange closed 0.8 percent higher at 2,699 yuan ($325) a ton today, after falling 4.9 percent over the preceding three trading days. The price has fallen 16 percent over the past month, compared with an 8.7 percent decline for September soybeans on the exchange.

In April, Chinese regulators told banks to curb lending just as many soybean processors increased their reliance on loans to pay record high prices for imported soybeans.

When crushers tried to pass on higher costs to pay for soybeans they had ordered from overseas, customers balked, opting for canola and other protein substitutes. Soybeans are crushed to make soymeal, an animal feed ingredient, and cooking oil.