September 2, 2010

China may experience early frost in parts of northeast soy area

The China Meteorological Administration has forecasted early frost in the next 10 days in the northern parts of Heilongjiang province.

Grain markets have been concerned over the weather in the northeastern areas, which produce about 40% of the country's corn.

"Cold air movement would be frequent and strong in September," Chen Zhenlin, the administration's spokesman told a news conference on Tuesday (Aug 31).

A cold spring had delayed planting of the soy and corn crop, which meant the harvest could also be delayed, leaving them at risk of damage from early frost.

Heilongjiang's northern areas produce mostly soy rather than corn. The whole province produces about 40% of China's total soy output.

"Significant uncertainty surrounds Chinese corn supplies with many market participants, including Rabobank, questioning official stock levels. The likelihood of sizeable Chinese imports this season will hinge on seasonal conditions in China over the next month," Rabobank said in a report.

A local soy farmer said weather so far in the area was normal. They may see a bumper soy harvest this year due to sufficient rains this year because last year's crop was hit by serious drought.

The administration forecasted more-than-normal rains in the southern parts of the northeast, with some areas having 20-50% more than normal years, weather officials said.

On Tuesday, the government sold out only 30%, or 467,100 tonnes out of 1.58 million tonnes on offer at weekly state corn auctions. The volume was down sharply from last week's total sale of 1.09 million tonnes.

The low trading volume in anticipation of weakening domestic prices <0#ASCORN-CN> ahead of the harvest prompted sales of Dalian futures <0#DCC:>, analysts said.