June 12, 2009

China is considering giving direct support to soy crushers as the government is exploring ways to persuade farmers to plant more soy and buyers to rely less on imports, a senior official said on Thursday (Jun 11).

 

Currently, China is the world's largest soy importer and the country has pushed up the Chicago Board of Trade (CBOT) futures prices this year due to its record amounts of imported soy.

 

Although the Chinese government has offered farms a high price for their soy supplies this year, farmers are facing a surplus after five consecutive years of bumper harvests. The situation was made worse by the huge volume of imports attracted by the government's procurement and the knowledge that the government is holding record stockpiles that it could sell if prices rise too much.

 

The government now only subsidises the cost of seeds to help growing in the northeast, which is the main soy-growing region. However, it had widened the area of subsidy payout last year.

 

Fang Yan, a deputy director with the National Development and Reform Commission (NDRC), said the government was looking into ways to improve its stockpiling programme that began last year.

 

In an oilseed conference organised by Global Leaders Institute, Fang said the new policy will not only consider the farmers' interests by stockpiling but also bear in mind the interest of local crushers.

 

This year, China plans to spend nearly RMB27 billion (US$3.95 billion) to stockpile up to 7.25 million tonnes of soy, almost half of last year's harvest of about 15.5 million tonnes.

 

Meanwhile, traders and analysts expect China's soy imports to hit nearly 40 million tonnes in the year ending September with the main sources of imports from the US, Brazil and Argentina.