Tough times ahead for China soy industry

The soy sector in China may face its worst period this year.

Currently, about 50 percent of the soy processing factories in northeast China have stopped production due to massive shortfall of local raw materials.

The country planned to collect 7.25 million tonnes of soy in the first half of the year, representing half of the total 16.5 million tonnes produced in 2008. Such an aggressive collection keeps a vast amount of soy away from the trading market, pointed out market observers.

Worse still, large soy processing factories are brewing branches in the coastal areas one after another, turning their focus to exported soy from domestic products.

Soy price in Heilongjiang, one of the major planting areas in China, soared to RMB3.6 per kilogramme after the government backed soy collection. It makes it even more difficult for soy processors to make a profit.