Tidbits
China’s government grain stock piler, Sinograin, announced yesterday (Sunday) it had agreed to buy 10 million mts of soybeans from Archer-Daniels-Midland Co, Syngenta, Louis Dreyfus, Bunge Ltd, Cargill Corp and COFCO International during a signing ceremony at an event in Shanghai, which included crude oil, coal, iron ore, etc.
Before you mortgage the farm and buy soybean futures, be advised this is an annual event. China imports 90 to 101 million mt of soybeans a year. Ten million mt is significant, but we already knew China would buy 90 to 101 million mt this year. So, this ten million mt is not very significant.
Sinograin is the government agency that maintains about half of the world’s carryover of all food commodities in the grain warehouses owned by the Chinese Communist government. When we read about China will hold an auction to sell government stocks of grain, soybeans, meal, veg oil, corn, etc., it is Sinograin offering the commodity for auction because domestic prices are getting a little bit too high for consumer comfort, which makes government officials nervous when the natives start complaining about high food prices.