June 29, 2011


China's soy auction fails on weak demand


China failed to sell any of the 300,000 tonnes of soy reserves it offered at an auction Tuesday (Jun 28) after failures in the past several auctions, the National Grain and Oil Trade Centre said.


The floor price at the auction was set at RMB3,920 (US$606)/tonne, almost losing advantage over purchase prices of about RMB3,800 (US$588)/tonne in major producing areas and import prices of around RMB4,000 (US$619)/tonne.


This is the 14th batch of state soy reserves put under the hammer since December of last year. Due to unappealing floor prices, China only sold out 11,100 tonnes of about 4.16 million tonnes of soy reserves at these auctions.


Weak demand is a main factor to cause the failure in the auction. Domestic edible oil processing capacities are operated at a low level, affected by the government's price capping policy which is expected to extend to the middle of August.


Meanwhile, the country imported a large amount of soys in the first five months and soy stocks stood at a high level of about seven million tonnes.


China imported 4.56 million tonnes of soy in May, up 4% over the same period of last year and the imports in the first five months totaled 19.41 million tonnes.


The latest data from the Ministry of Commerce show that the country's soy imports delivered in June are projected to reach 5.39 million tonnes, up 18% over May.


Meanwhile, the chairman of the American Soybean Association (ASA) said recently that China's soy imports from the US may grow by 5% this year, sources reported.


According to ASA, China imported one quarter of the soy output in the US and became its top soy buyer last year.

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