The Chinese government will start stockpiling soy and corn from local farmers at higher prices than a year ago, an industry source said on Tuesday, a move set to stabilize domestic prices and support soy imports.
China, the world's top soy buyer, will pay 4,600 yuan ($740) per tonne to soy farmers in four major growing areas in the northeast. The price was 15 percent higher than what was offered last year, said the source who has seen a government document.
Beijing will pay between 2,100-2,140 yuan per tonne to stockpile domestic corn in the northeast corn belt, up about 7 percent from year ago, the source said.
The latest stockpiling, expected to start over the coming weeks and stretch till the end of April, is an annual exercise to protect farmers' interest.
With the new stockpiling price for soybeans around 4 percent above the price of imported supplies at Chinese ports <0#ASSOYA-CN>, analysts said the government's latest reserve build would keep crushers' enthusiasm for imports alive.
"The stockpiling plan will stabilise domestic prices at current levels. Crushers will continue to import as domestic demand stays healthy," said Zhang Ruming, an analyst with Dalian Liangyun Futures Co. Ltd.
China has stayed on the sidelines of the global corn market as high international prices made imports unattractive.
Industry speculation of stockpiling prices has already pushed up Dalian soy prices <0#DSA:>, with the most-active May 2003 contract up 1.24 percent to close at 4,757 yuan per tonne on Tuesday.
China's soy imports are expected to rise to 4.8 million tonnes in November, up from 4.03 million tonnes in October, according to estimates by the China National Grain and Oils Information Center (CNGOIC).
Beijing has been selling its state reserves over past months to help keep the market well supplied and cap food inflation.
China, the world's second largest consumer, is expecting a record corn harvest or 201 million tonnes, which was 4.3 percent higher than last year.