November 4, 2011

As soy planting area in Heilongjiang has been shrinking in the past years, the soy industry in northeast China, which boasts soy self-sufficiency for a long time, starts to see a shortfall in supply.

With soy planting losing its advantages, many farmers have chosen to plant other crops for a higher profit, analysts said.

Soy planting area in northeast China (including Heilongjiang, Jilin and Liaoning provinces, and Inner Mongolia Autonomous Region) shrank 10% on-year in 2010. The planting area in Heilongjiang contracted 22% this year.

In the face of cheaper soy imports, many domestic crushers have built plants at coastal area and gradually abandoned domestic soy from northeastern China while enjoying extravagant profit in importing soy.

More than 80% of cooking oil processing mills in Heilongjiang suspended production due to difficulties in soy purchases, said Wang Xiaoyu, deputy secretary general of the Heilongjiang Soy Association.

Recently only a few of oil crushers in the province have purchased soy as most were deterred by high prices after failing to buy soy at low prices in an earlier period, Wang said.

Wang estimated that nearly a half of soyoil on the Heilongjiang market comes from the soy-importing crushing mills outside the province.

The market is paying attention to the soy purchase policy this year. If the minimum purchase price of soy does not rise prominently, soy planting area may drop further next year, analysts said.