November 22, 2007

China's tariff cut speculations hike soy prices

Soybean prices rose to the highest closing price in 34 years due to speculated cuts on import tariffs by China, the world's biggest buyer of soy.

Dalian Commodity Exchange (DCE) reported that soybean fell as much as 4 percent on assumption China will reduce soybean duties into 2008 and cut a tariff on vegetable oils.

China's soybean-oil imports jumped 81 percent in the first 10 months of this year, the DCE said.

Soybean futures for January rose 16.5 cents, or 1.5 percent, to US$10.87 a bushel on the Chicago Board of Trade, the highest close since July 1973.

Futures yesterday reached US$10.90, the highest intraday price since June 1988. Most-active futures are up 63 percent in the past year after US farmers planted the fewest acres in 12 years to sow more corn. 

The National Development and Reform Commission said China's soybean-import tariff was cut on Sept. 21 to from 3 percent to 1 percent, effective for three months since Oct. 1.

China will increase supplies of food and crude oil to address inflation, Premier Wen Jiabao said at a State Council meeting last week. Consumer prices rose by 6.5 percent on-year.

Speculations the government will cut a 13 percent value-added import tax on soybeans and soybean oil increased purchases of US soybeans, said Timothy Brusnahan, a vice president of Richard A. Brock & Associates in Milwaukee.

US exporters reported sales of 107,000 metric tonnes of soybeans and 20,000 tonness of soybean oil to China, the Department of Agriculture said today.