Bumper Soybean Harvest in China Sparks Fear of Cuts to State Buying
China’s soybean farmers are on pace to harvest the country’s largest crop in six year, sparking a price drop to the lowest point in 18 months, and concern that the government will either restrict or suspend state purchases at some warehouses.
China’s soybean output is expected to top 14.4 million tons this year - an increase of 11 percent year-on-year, marking it the biggest output since the 2011/12 season, according to U.S. government data.
Pressure is high as warehouses are already to capacity while demand is not as strong as expected since the new crop began to reach the market in September. Recognizing that warehouses were filling up, Sinograin - the state-run entity that oversees the crop purchase rotation system - announced that it had increased the number of warehouses open for soybean purchases.
Exacerbating the problem is the fact that Beijing has increased subsidies this season in order to entice farmers to switch from corn to soy as a means of mitigating the country’s oversupply of corn.