China Agriculture View

China’s weekly state soybean auctions failed to attract bidders in Jilin and Inner Mongolia, with only 15,500 tonnes of soybeans sold in northeast Heilongjiang, or 3.1 percent of the total volume offered.

The highest price paid was 3,790 yuan ($555.3) per tonne, down nearly 100 yuan compared with last week, when the market was concerned about a drought in the major soy-growing area of northeast China.

“It came as no surprise to the market,” said Xia Tian, a dealer at Zhejiang Yongan Futures. “Buyers won’t have interest in domestic soy reserves unless the U.S. soybean price goes up by $12 per tonne. Crushers hold enough stocks of imported soybeans. They can wait for the new soybean harvest.”

Beijing set the bidding price for domestic soy reserves at 3,750 yuan per tonne, about 4 percent higher than the U.S. crop for next January’s shipment.

“China has to sell the state reserves at the current price, otherwise it will suffer a loss as the government purchased soybeans from farmers at 3,700 yuan per tonne last year,” said Dong Shuangwei, an analyst at Capital Futures.

China has started to sell state soy reserves as part of efforts to reduce stockpiles and free storage ahead of the new domestic harvest, due next month, but only 85,300 tonnes were sold out of the large state reserves in the nine auctions.

China purchased about 7.3 million tonnes of soybeans for state reserves last year.

“The market is closely watching the overseas markets and controversial forecasts of a fall in output, ranging from 4 percent to 20 percent. However, as Beijing has enough reserves at hand and it has a policy of supporting farmers, the domestic soybean market will have a limited decline,” said Dong.

The following table shows the results of soybean auctions starting from July (volumes are in tonnes, prices in yuan per tonne):

Date Volume sold Highest price Volume

September 16 15,500 3,790 500,000

September 9 29,300 3,880 500,000

September 2 10,600 3,820 500,000

August 26 9,600 3,750 500,000

August 19 400 3,750 500,000

August 12 15,000 3,800 500,000

August 5 4,900 3,790 500,000

July 29 no bidders 500,000

July 23 no bidders 500,000

Total 85,300

Source: www.grainmarket.com.cn.