November 9, 2007

China's soy crop shortage sparks run on soyoil 

China's 2007 soy crop production is projected to go as low as 12 to 13 million tonnes compared to an earlier estimate of 14 million tonnes, according to traders in China.

China's 2006 soy crop production totaled 15.9 million tonnes. Crude soyoil prices have skyrocketed this week at US$1,266 - 1,293 a tonne, up by US$134 since October, an 85 percent increase compared to figures of first quarter this year.

Crushers hope to buy the local crop although domestic beans are not necessarily cheaper anymore. The government has been calling on crushing plants to curb prices but analysts say this could do very little since soy prices are dependant on international markets.

Although China does offer subsidies to offset prices, these are unlikely to be there for the long term. Moreover, speculation has in exchanges like Dalian's further boosted prices.

In general, soy imports tend to be more costly compared to domestic soy due to high freight costs.