September 2, 2010

China may auction soy reserves

Provincial agriculture officials in China's northeast are negotiating with soy crushers on a likely soy reserve auction this month, an official with a government-backed grain policy and research agency said Wednesday (Sep 1).

The auction would be the first this year, and may serve to rein in sharply higher prices that set a fresh record high Monday.

China's government is closely monitoring grain prices, which have contributed to inflationary pressures this year and remain a thorny issue ahead of the high-consumption autumn festival season over the next two months.

A Shanghai-based grains trader said the likely auction, if it takes place, would weigh on prices, since it would add to supply from imports, which reached a record high of 6.2 million tonnes in June.

Details of the soy auction are being worked out, including the offer volume and rules for participation, but 1.5 million tonnes has been cited as the volume that is likely to be offered for sale.

The official confirmed that discussions were proceeding, but added that there is no official notification of the auction yet.

Oil crushers are close to agreement with Heilongjiang province officials on the need for the auction, with only logistical details like the date to be worked out, according to analysts.

Analysts believe that such a sale would help replenish low stocks for soy crushers ahead of the new soy crop harvest in October.