March 9, 2010

Soy futures rise as China may import more to expand inventories

Soy futures rose the most in more than a week on speculation that China, the world's biggest buyer and consumer, will boost imports to expand inventories.

China will keep reserves equal to as much as 40% of annual consumption to ensure food security, and may increase purchases from overseas, said Bao Kexin, the president of China Grain Reserves Corp.

The inventory-to-use ratio is almost double the world level of 23%. COFCO Ltd., China's largest grain trader, said it will expand crushing capacity by more than 40% this year.

Soy futures for May delivery rose 5.25 cents, or 0.6%, to US$9.48 a bushel on the CBOT, the biggest gain since February 26. The most-active contract fell 1.9% last week, the first decline in four weeks, on forecasts for record production in Brazil and Argentina, the biggest exporters after the US.

Soy futures for September delivery rose 0.4% to RMB3,836 per tonne on the Dalian Commodity Exchange in China. That is the equivalent of about US$15.29 a bushel, according to data.

Earlier, Premier Wen Jiabao said the government would seek to increase production of grains and oilseeds, raise minimum grain prices and continue stockpiling agricultural commodities.

Some of the increased output would go to feed livestock. China, the world's largest pork producer and consumer, may increase output of the meat to 50.6 million tonnes this year, up 3.5% from 2009, the USDA Foreign Agricultural Service said.