July 22, 2011

 

China to release soy reserves onto market
 

 

The Chinese government will sell a reserve of four million tonnes of soy to reduce losses of edible oil producers, but analysts said soyoil prices would still maintain an upward trend.

 

From last December to June 2011, the government sold 2.46 million tonnes of soy reserves to major producers at lower prices. However, the reserves are still too small to cover all major producers. Some who cannot get the reserves, especially small-scale producers, have chosen to reduce or suspend production so as to reduce losses, sources said.

 

Stock of imported soy in major ports of China totalled 6.77 million tonnes last Wednesday, 130,000 tonnes more than a week earlier.

 

It is believed that the government's restriction on edible oil price hike would be lifted on August 15, while the demand for soyoil would go up due to the onset of the festive season, which will prompt loss-making oil producers to raise prices, analysts said.

 

In the medium to long term, it is possible that soy production will decline as planting area decreased, analysts added.

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