July 14, 2009

The month-long rain in Heilongjiang, China's top soy growing area which last year produced 40 percent of the country's 15.5 million tonnes soy output, could see its output being reduced further after earlier drought damage, traders said on Monday (Jul 13).

Heilongjiang's total soy output for this year are seen lower by more than 10 percent due to the damage caused by the flooding in some areas of the province as well as the drought.

Soy shipments to China could be boosted if there is any reduction in domestic production but the role of government's stockpiling will be a major factor in how much the country buys.

One analyst with a local soy consultancy said the company expected yields to drop 10 percent with the planting acreage also likely to decline between 10 to 20 percent.

Supply in the province was tightened following the government's stockpiling that concluded in end-June. Meanwhile, traders estimated the latest procurement had pushed the government's soy inventories to as high as six million tonnes, which provided the government a buffer against any supply shortfall.

On the other hand, as part of a programme of rolling over stocks to keep them fresh, Sinograin's warehouses in Heilongjiang, Inner Mongolia and Henan are selling 61,820 tonnes of soy stocks from harvests prior to 2008, according to an announcement posted on the agency's web site.