October 19, 2010

China to start buying new soy from Nov 1

The Chinese government is expected to start the purchase of newly harvested autumn soy for state temporary reserve from November 1, a source said.

The purchase price of third-grade soy may come to RMB3,800 (US$571)/tonne, that of second-grade soy would be RMB3,840 (US$577)/tonne and that of first-grade soy would arrive at RMB3,880 (US$583)/tonne.

Each of the purchasing prices would be RMB60 (US$9)/tonne higher than last year's.

China has released a raft of policies on farm produce prices as autumn grain purchase progresses.

On October 12, the National Development and Reform Commission (NDRC) published the minimum wheat purchasing price. The minimum purchasing price of third-grade white wheat was set at RMB1,900 (US$286)/tonne, up RMB100 (US$15)/tonne from 2009. It has not yet released any price policy for corn, which takes up one third of autumn grain production.

Currently, the corn price in major producing area Jinlin province have approached RMB1.8 (US$0.27)/kg, well above last year's minimum purchasing price of RMB1.5 (US$0.22)/kg.

The minimum corn purchasing prices are unlikely to rise sharply from last year against the backdrop of stronger inflationary expectation.

Market observers are watching closely whether the country will continue to grant subsidies for corn purchasing companies. In 2009, the government delivered RMB70 (US$10)/tonne of subsidy for south China-based feed companies that purchased corn in northeast China. That the subsidy will be cut by half this year, sources said.