November 8, 2011


China's reserve soy auction draws no bids


China failed to sell any of 309,859 tonnes of reserve soy it offered at an auction on Tuesday (Nov 8), according to the China National Grain and Oils Information Centre.


This was the 23rd 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 6.89 million tonnes of soy from reserves at those auctions.


The failure is within expectations as it is now the marketing season for new soy. Currently, new soy purchases in major producing areas are slim as farmers restrain sales on expectations of higher prices. Meanwhile, domestic cooking oil crushers have a low operating rate, and are prudent in purchases.


The new soy market has a strong wait-and-see sentiment, as buyers wait to see what the government's stockpiling policy will be. Industry insiders generally predict that the minimum purchase price for new soy will stand at RMB3,900-4,000 (US$614-629)/tonne this year.


At present, domestic soymeal and soyoil prices remain soft. Soy processing companies in major producing areas as well as in coastal areas both made losses in production. Analysts estimated that soyoil crushers would incur losses of RMB116 (US$18)/tonne with domestic soy as the feedstock and make losses of RMB324 (US$51)/tonne with imported soy.

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