China's soybean futures hit record high as supply, acreage tighten

BEIJING/SHANGHAI: China's soybean futures on the Dalian Commodity Exchange hit a record high on Monday, on tight supply and as some farmers are expected to reduce soy acres in favour of corn on higher profit potential.

The most actively traded soybean futures on Dalian Commodity Exchange for delivery in May rose as much as 2.5% to 6,058 yuan ($937.23) per tonne in early trade.

"(Domestic) soybean supplies are tight, and the downstream (users) are okay with the high prices," an industry source familiar with the domestic soybean market said.

"It is also expected that soybean planting acreage will decrease this year, as farmers will switch from soybeans to corn," said the source, who declined to be named as he was not authorized to speak with the media.

Farmers in the northeast region, top producer of both soybean and corn, will likely grow more corn in the new crop year on higher profit as prices of the grain soared to record high levels, analysts said.

China will hike its corn planting acreage by at least 667,000 hectares in 2021, the country's agriculture ministry said last week.

Rising domestic soybean futures were also supported by higher edible oil prices.

"Soybean oil prices are also up. Some consumers are willing to pay a premium to non-GMO soybean oil and that helps support domestic soybean futures as well," said Darin Friedrichs, senior analyst at StoneX.

Limited arrivals of imported soybeans are expected in March due to harvest delays in top exporter Brazil, helping bolster domestic bean prices.

China does not permit planting of GMO soybeans and its domestic soybeans are mainly used in food sector to make tofu and soymilk, while crushers bring in imported soybeans, nearly all genetically modified, to crush into soymeal to feed the livestock sector.

Both beans can be used to make soybean oil for cooking, though some consumers in China have preference for non-GMO edible oils.