News
30.11.2009
China to Buy More Domestic Soybeans to Boost Farmers
China, the world’s largest soybean buyer, will purchase the oilseed and corn from the domestic market to boost farm incomes, the National Development and Reform Commission said.
The government will start the purchases from northeastern areas on Dec. 1, 2009 and continue through April 30, 2010, the country’s top economic planner said in a statement published on its Web site today. A one-off subsidy of 160 yuan ($23) per metric ton will also be offered to crushers to purchase local beans, it said.
Soybeans in Chicago climbed to a nine-month high in June after stockpiling by China earlier this year to boost state reserves and support local prices pushed imports to a record. Reserves remain high as auctions to reduce inventories before the domestic harvest failed to attract local buyers.
“China is unlikely to import much more soybeans than it did last year because the crushers will have incentive now to use more local beans,” Tian Feng, analyst at BOC International (China) Co., said by phone from Shanghai today.
The government has made maintaining social stability a key policy aim and Beijing bought more than 6 million tons of soybeans earlier this year to help boost local prices at a time when the global recession threatened to reduce farm incomes.
Farmer’s Interest
“After approval from the state council, the work of purchasing grains from the northeastern regions will protect the interests of farmers and promote the steady development of grain production,” according to the statement from the NDRC, as the economic planner is also known.
The purchases will be made in Inner Mongolia and the provinces of Liaoning, Jilin and Heilongjiang, it said in the statement dated Nov. 13. No limit will be set on how much the government will buy, it said.
“The policy is deemed bullish for the local soybeans but the whole commodities market is in a panic today because of the Dubai default,” Tian said. Soybeans, corn and wheat slumped in Chicago after Dubai’s bid to reschedule debt sent equities tumbling and eroded investor confidence in commodities.
Still, auctions of soybeans purchased earlier this year to make room in reserve silos for the new crop have failed to attract significant buying. China will suspend the weekly soybean sales starting next month, the National Grain and Oil Trade Center said in a statement on its Web site Nov. 20.
Import Reliance
China relies mostly on imports to meet its soybean needs, with consumption estimated at more than 54 million tons this year and domestic supply at 14.5 million tons, according to the U.S. Department of Agriculture.
“There could be spill over demand going into the import side of things,” Ben Barber, a futures adviser at Bell Commodities Ltd. said by phone from Sydney today. State purchases of locally grown soybeans may leave less supply for crushers, helping sustain the nation’s demand for imports, he said.
Imports in December may be more than 4 million tons with shipments in November expected to be about 3 million tons, the China National Grain & Oils Information Center said Nov. 24.
A record 73.787 million bushels of U.S. supplies were inspected for export in the week ended Nov. 19, with China accounting for 78 percent of the total, the U.S. Department of Agriculture said.
China’s soybean imports fell for a fourth month in October to 2.52 million tons, according to the customs office. Imports have dropped since reaching a record 4.71 million tons in June.
Soybeans for January delivery on the Chicago Board of Trade declined as much as 3.2 percent to $10.21 a bushel today and traded at $10.25 by 4:47 p.m. in Shanghai. September-delivery contracts on the Dalian Commodity Exchange closed down 0.6 percent at 3,935 tons.
Bloomberg
