BEIJING: Chinese soybean prices fell to their lowest in 18 months on Monday, amid concerns the government might lower its price or suspend state buying of the oilseed as farmers harvest the country's largest crop in six years, analysts said.
Beijing started buying soybeans from the new harvest to rotate stocks in its strategic reserves earlier this month, a regular programme to maintain stockpile quality and protect farmers' profits.
The commodities analysts said it would be very unusual for the government to adjust that routine during the harvest season.
Sinograin, the state-owned enterprise in charge of the crop purchase rotation system, said in a statement that purchasing was underway and being carried out as normal.
"Rumours that Sinograin will stop purchasing are not true," said the statement sent to Reuters late on Monday.
Details about the programme, including purchase prices, volumes or the duration are not made public.
The most-active Chinese soybean contract on Dalian Commodity Exchange for delivery in January slumped 1.15 percent to close at 3,682 yuan per tonne, after falling to as low as 3,667 yuan earlier in the session, its lowest since April last year.
Prices in the world's top consumer were pressured by speculation that the government might suspend buying at some warehouses, which are already full to capacity, or lower its purchasing prices of soybeans, the analysts said.
"There's great pressure on supplies of domestic soybeans as new harvest hit the market in a concentrated manner," said He Yuxin, an analyst with Shandong-based Zhuochuang commodities consultancy.
"Demand is not as good as expected. And then there were rumours saying some grain warehouses might lower buying prices or suspend purchase."
Sinograin said in the statement it had increased warehouses for purchases as storage at some sites was full. It added prices will be dependent on the market, as purchasing for rotation is different from the temporary stockpiling of previous years.
Speculation began to swirl early last week, as a big harvest of the oilseed hit the market in large volumes following an increase in domestic acreage. Beijing has increased farm subsidies this season to encourage growers to increase their soybean acreage to cut supplies of corn.
Soybean prices have been falling since the harvest started hitting the market in September, an official from the Chinese Agriculture Ministry said last week, amid increased domestic output and foreign arrivals.
China's soybean output is expected to reach 14.4 million tonnes this year, up near 11 percent from last year, according to CNGOIC estimates. That would be the highest since 2011/12, according to US government statistics.