December 14, 2010

 

China Heilongjiang's soy output drops in 2009-10

Soy output in China's northeastern Heilongjiang province in the 2009-10 crop year fell 1.2% to 5.85 million tonnes, the local agricultural department said Monday (Dec 13).

 

Heilongjiang may have accounted for about 40% of China's total soy production in the crop year that ended September 30, according to Heilongjiang Soybean Association Deputy Secretary General Wang Xiaoyu.

 

The decline in output was caused by a continuing shift prompted by more attractive profit margins for corn and rice, he said.

 

"Heilongjiang's soy planting area is very likely to fall next year," he said, referring to planting in early 2011 for the current 2010-11 crop year.

 

The province's rice output climbed 17.1% to 18.44 million tonmes in the latest harvest, while corn production rose 21.1% to 23.25 million tonnes, according to official data. Heilongjiang is the country's No. 2 grain-producing province, after central China's Henan.

The central government hasn't announced a breakdown of grain output data, but the state-backed China National Grain and Oil Information Centre said in a report in October that 2009-10 soy production was expected at 14.8 million tonnes, down 1.3% from the previous crop year.
 

The decline in production hasn't caused domestic prices to increase, however, as imported soy have accounted for more than 75% of the market.

 

China imported 49.37 million tonnes of soy in the first 11 months of this year, up 31% from January-November of last year, and November imports were up 90% from a year earlier to 5.48 million tonnes, according to the General Administration of Customs.

 

High imports have pushed domestic soy prices below the government's recommended price at RMB3,800 (US$571)/tonne in Heilongjiang, but some crushers still believe the price is too high in the midst of tough government measures to control food prices.

 

At the end of November, the National Development and Reform Commission told major edible oil producers including Cofco Ltd, Jiusan Grain and Oil Group and Yihai Kerry Group to hold down prices for the next four months.

 

Soy prices in Heilongjiang provinces are between RMB3,600 (US$541)/tonne and RMB3,720 (US$559)/tonne, according to the provincial soybean association.

 

Some crushers have had to suspend production in the province because they can't afford to buy soy with edible oil prices capped by the government and the soymeal outlook uncertain, Wang said.

 

Farmers are still reluctant to sell as they expect prices to rise to about RMB3,800-4,000 (US$571-$601)/tonne, he said.

 

"The market supply is sufficient now," he said, citing the failure of recent government soy auctions to attract any bids.
 

However, the government will continue to offer soy to demonstrate its resolve in efforts to curb inflation. About 300,000 tonnes of soy are to be auctioned Tuesday.