BEIJING: China has bought another 500,000 tonnes to 600,000 tonnes of soybeans to fill its state reserves and take advantage of low global prices, traders said on Thursday.
China aims to import a total of 2 million tonnes of soybeans in the 2011/2012 year, and the latest purchases appear to have fulfilled more than 60 percent of its target.
China Grain Reserves Corp. (Sinograin), which manages the state reserves, bought nine cargoes of the crop from up to three US exporters on Tuesday night for shipment in the first half of next year, two trade sources said.
The arrival prices ranged between 3,850 yuan and 3,950 yuan per tonne, they said, below current domestic prices of around 4,100 yuan per tonne.
The soybean purchase is Sinograin's second this year.
Sinograin's spokesman Cheng Bingzhou could not be reached for comment.
"It would be a very valuable price for the state reserves to buy if it falls below $12 per bushel," said a manager with a state-owned grain trader, who declined to be named.
China's soybean output in 2011 is estimated to be more than 10 percent lower than last year at 12.5 million to 13.5 million tonnes, industry participants say.
The government aims to soon buy local soybeans from farmers at 4,000 yuan ($630.4) per tonne, below the current price of around 4,100 yuan per tonne, traders said on Thursday.
The volume of the soybean purchases, which will be used to fill state reserves, will not be capped, they said.
But Sinograin finds it hard to buy from the domestic market as local prices are high and farmers seem unwilling to sell, a soy trading manager said.
"The government may hike the purchase price later on if they find the price failed to attract enough volume," said Liang Yong, an analyst with Galaxy Futures, adding that cheaper global prices may limit the room for possible hikes.
However, as the government still has on hand up to 5 million tonnes of old soybean stocks, bought from the 2008 harvest, it may not step up imports beyond its plan for 2 million tonnes before the old stocks are released, he added.
Soybean quality may start to deteriorate if stored for more than two years.
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