November 16, 2010

China sells soy to ease surging edible oil prices

Heilongjiang province, a major province for soy growing in northeastern China, will sell 246,000 tonnes of the raw material for edible oil to check the ballooning edible oil prices across the country.

However, the sale will not help much as the amount being sold is not enough, according to informed sources. "The edible oil makers in Heilongjiang are able to process 30,000 tonnes of soy a day, so 246,000 tonnes can be used for squeezing in less than a week," a local industry watcher said.

The Heilongjiang soy will be sold at RMB3,633 (US$547)/tonne, a good price given the local snowstorm will definitely slash future output and disrupt transport. The oil squeezers in northeastern China currently buy soy at RMB3,840 (US$524)/tonne on average.

A weak dollar has pushed up international commodity prices, while China's edible oil market is likely to depend more on soy imports, a Chinese commodities exchange director warned last week.

The nation's soy imports have been projected to hit a record 52 million tonnes in the fiscal year of 2010/2011, and that amount will make up 78% of the nation's additional supply of the crop during that year.