October 12, 2011

China failed to sell any of the 300,000 tonnes of reserve soy it offered at an auction on Tuesday (Oct 11), the China National Grain and Oils Information Centre said.

This was the 21st batch of state soy reserves put under the hammer since December of last year. However, the government only sold out 16,100 tonnes of the total 6.27 million tonnes of soy from reserves at those auctions.

The reserve soy lost appeal as traders paid more attention to new soy. The floor price of RMB3,960 (US$621)/tonne at the auction was just slightly lower than purchase prices of new soy.

By October 10, the country's biggest soy producing area, Heilongjiang province, had completed harvesting. Purchase prices of new soy stand at RMB4,000-4,100 (US$627-643)/tonne. However, crushers have not started large purchases but are generally adopting a wait-and-see attitude.

Industry analysts predict that output cuts and rising planting costs will give firm support to the soy market in the fourth quarter, adding that RMB4,000/tonne is likely to be the bottom purchase price for new soy this year.