Negligible impact as China cancels soy export tax

China's cancellation of its soy export tax may not help boost its soy exports much as it has limited global demand.

China analysts said the scrapping of China's soy export tax will have limited long-term impact as the country does not export soy in large volumes.

Soy future prices were slightly up after the announcement of the cancellation of the export tax on Tuesday (Dec 16). The benchmark May 2009 soy contract traded at Dalian Commodity Exchange settled 1.7 percent lower at RMB3,035 a tonne Tuesday after trading as low as RMB3,010/tonne. 

The Ministry of Finance said in a statement that the country has scrapped the 13 percent value-added tax on soy exports.

The export tax was scrapped in a bid to relieve price pressure on domestic soy supplies and to ensure supplies were ample.

Li Honglei, an analyst at Nanhua Futures Co. said China is not likely to sharply increase exports because most of its output is of limited demand in the global market.

China is the world's biggest producer of non-genetically modified soybeans, most of which are exported to Southeast Asia to make products such as tofu. It only exported 456,468 tonnes of non-GM soy in 2007.

A large domestic crop and tumbling global commodities prices have pressured domestic soy prices in recent months.

US$1=RMB6.831 (Dec 18)