BEIJING: China's attraction for imported soybeans has hurt the domestic growers on the one hand and on the other sustain high prices for the commodity even when its prices were declining in USA and other markets

In April 2009, China's soybean import volumes were 3.71 million tons, up by 55.2% year on year. Accumulative soybean import volumes reached 10.15 million tons in the first quarter of 2009 in China, an increase of 30.4% year on year, according to a report by China Research and Intelligence (www.shcri.com)

Since the latter half of 2008, with the outbreak of international financial crisis, the soybean futures price in Chicago was dropped sharply. There was no exception for the soybean price in China and the soybean farmers suffered from serious hits. From November 2008, China began to carry out the policy of government purchase of soybeans which led to bullishness in the commodity.

Amidst global financial crisis, mass soybeans flew into China at a low price, making the monthly soybean import volumes in China surge to over 3 million tons for successive five months.

The competitions between Chinese soybeans and the imported soybeans have spread to the major soybean producing area-Heilongjiang. The soybean oil and soybean dreg market in the domestic market in the major producing areas have been occupied by the genetically modified products. The domestic soybean price is 60 to 80 USD higher than that of the imported soybeans, leading to many processing enterprises with soybeans as the raw materials stop producing or restrain from producing in droves because it is no longer remunerative to cultivate in Heilongjiang.

In the first quarter of 2009, over 80% of the imported soybeans were from America, and the left were from Argentina and Brazil, most of which from above mentioned countries were the genetically modified soybeans. Compared with the domestic soybeans, the imported soybeans occupy the absolute advantages regardless of the price or the oil yield. Domesitc soybeans face seeral constraints when it comes to oil processing as it is low in oil content but rich in vitamin contents beneficial for producing soy sauces and soybean products.

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In 2001 before entry of China into WTO, the country had already opened up the soybean market. The four largest multinational grain giants, including ADM, Bungay, Cargill and Louis Dreyfus, began to enter China gradually. They in turn began to occupy a major position in the domestic soybean market through the genetically modified soybeans. The multinational enterprises have controlled 80% of the soybean sources of the imported soybeans and 70% of the actual soybean processing capacity. According to the statistics in 2008, there were about 100 large oil processing enterprises in China, and over 60 enterprises were merged or held by the foreign funded enterprises. The multinational grain dealers have permeated into various soybean fields, such as planting, trade and circulation etc.

In China, Soybean is only one fully connected commodity with the international market. Here it is considered a cash crop rather than as a grain crop. Therefore, it is attracting international attention with the investment by foreign funds and companies from planting to processing stage. (Courtesy: PRLog.org)