September 10, 2009

China's weekly auctions of soy from state reserves hit the highest volume Wednesday (September 9) due to increased purchases on concerns of a drop in output.

The government sold 29,300 tonnes of the crop in this week's sale, or 5.9 percent of the 497,900 tonnes it offered, the highest since the program began in end-July.

The China National Grain and Oils Information Centre, a state-supported think-tank, cut its output forecast for soy in its latest report issued Wednesday due to a lower acreage estimate and bad weather, including drought.

The forecast for 2009 was cut by 500,000 tonnes to 14.5 million tonnes, indicating a 6.7 percent decline from a year earlier.

There are also concerns of an early frost in major soy producing areas in the northeast, said Li Lei, an analyst with COFCO Ltd's grain trading department.

Still, the volume sold wasn't significant compared with more than 6 millions of reserves the government holds.

So far, the government has sold 69,206 tonnes from its reserves, 1.7 percent of the 4 million tonnes it offered to sell.