November 17, 2011


China purchases 500,000 tonnes of US soy for reserves


China bought six cargoes or up to 500,000 tonnes of soy from the US Tuesday (Nov 15) to replenish state reserves, according to two trade sources.


China Grain Reserves Corp or Sinograin, China's official grain stockpiling agency, made the purchases for shipment in the first half of next year, sources said.


The buy takes the state stockpiler's total soy purchases to 60% of a target set by the government earlier this year of two million tonnes. Sinograin bought 700,000 tonnes of soy in early October.


Sinograin will likely buy more soy if prices on the Chicago Board of Trade fall below US$12 a bushel, said one of the executives, who work at a state-owned grain processing and trading company.


The stockpiler "will not consider US soy if CBOT price is higher than US$12," the executive said.


CBOT January soy contract traded around the US$12 mark Wednesday during Asian trading hours after settling at US$12.0025 overnight.


Sinograin has recently become an active buyer of global grains and oilseeds, due partly to the need to replenish its depleted reserves and also due to attractive prices of commodities on the international market amid concerns over a potential global economic downturn.


US soy at US$12/bushel is equivalent to around RMB3,900/tonne on a cost-and-freight basis at Chinese ports, much cheaper than domestic soy at RMB4,100-4,200 (US$646-661)/tonne, analysts said.


Sinograin in May confirmed that it had purchased one million tonnes of corn from the US it had booked in March for state reserves.


After the deal, the company is said to have bought more corn from the US in July and early October, when CBOT prices were low, though it has not confirmed any such deals.


China will likely buy about five million tonnes of corn from overseas suppliers in this marketing year, China National Grain and Oils Information Centre said previously.

Video >

Follow Us