July 27, 2011

China failed to sell any of the 300,414 tonnes of soy reserves it offered at an auction Tuesday (Jul 26), the National Grain & Oil Trade Centre said.

The floor price was set at RMB3,920 (US$609)/tonne, compared with purchase prices of RMB3,800 (US$590)/tonne in major producing areas as well as import prices of around RMB4,100 (US$637)/tonne.

This is the 16th batch of state soy reserves put under the hammer since December of last year. However, the government only sold out 11,100 tonnes of the about 4.46 million tonnes of soy from reserves offered at these auctions.

The persistent failure in soy auctions indicates that market demand remains weak. Recently, operating rate of domestic edible oil processing mills started to rise stimulated by increasing prices of soymeal. However, sluggish consumption in summer, heavy port stocks as well as the government's regulation on small-packaged cooking oil prices continue to weigh on the soy market.