Chinese government purchases of soybean for state reserves, which have pushed up Chicago Board of Trade (CBOT) prices, have angered some commercial buyers in the world's largest soy importer, according to a media report. Sinograin, which manages state reserves, has since October purchased twice from United States, buying about 1.2 million tonnes. Its latest purchases pushed up CBOT prices 2 percent on November 16.
"After price inquires by Sinograin, world soy prices have rallied, which led to losses for Chinese companies in their normal purchases," the China Business Journal reported over the weekend, cited a trading executive with a state-owned trading house.
Because Sinograin's purchases on the world market were considered a secret, companies such as COFCO, China Textile Grains and Oils, despite being owned by the government, were "the last to be informed," the executive was cited as saying. China buys about 60 percent of global soy trade.
The decision to buy soybean overseas for state reserves was made jointly by the State Grain Administration and the National Development and Reform Commission (NDRC), the paper reported, without saying how much the government may buy. Beijing has since 2008 built up imported soy reserves of between 2 to 3 million tonnes, which it rotates every year. It was not clear if the reserve volume had been expanded this year amid a 10 percent reduction in the domestic soy harvest.
Besides its state stockpiling function, Sinograin also runs its own crushers for commercial production. It recently established a new facility in the city of Tianjin, with annual capacity to process 1.5 million tonnes of soybeans and refine 450,000 tonnes of crude soyoil.
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