BEIJING, June 12 China's soybean futures hit
three-month highs on Monday, as talk that the world's top bean
buyer has ramped up checks on imports of genetically modified
(GMO) beans, spurred expectations of tighter supplies even as
the market remained awash with supplies.
China allows imported beans to be used by crushers to make
soymeal for animal feed but none of the beans, all of which are
genetically modified, are permitted for use in food products.
Reports over the years have suggested however that several
million tonnes of the cheaper imports could be flowing illegally
into the food sector.
On Monday, the most-active soybean futures hit
3,996 yuan ($587.82), their highest since March 10, as talk
circulated that China's quarantine authority had asked several
east coast ports to strictly inspect and punish firms found to
be illegally reselling imported beans to food companies.
CHS Inc is being probed as part of the
investigation, according to a report by Bloomberg on Friday.
Calls to the Chinese unit were directed to the headquarters in
the United States.
Prices ended the day at 3,957 yuan ($582.08) a tonne on the
Dalian Commodity Exchange, up 1.5 percent on the day. The gains
came after prices jumped 1.8 percent on Friday in their biggest
daily gain in more than a month.
Open interest - a measure of liquidity in the market -
jumped by a quarter on Friday to 287,132 lots, equal to 2.9
million tonnes of beans worth about 11.4 billion yuan. Data for
Monday will be released on Tuesday.
"Last week this news came out that the ports were
investigating this problem of leaking of imported soybeans,"
said Liang Yong, an analyst with Galaxy Futures.
"If the trade in imported soybeans is subject to controls,
the demand side will all fall on the domestic beans."
China's General Administration of Quality Supervision,
Inspection and Quarantine did not immediately respond to a
request for comment.
Beijing's efforts to crack down on leaking of imports into
the food sector come after China imported record volumes this
year and spurred hopes among some investors that the steps may
help to erode big domestic oversupply.
Still, a prolonged crackdown will upset major exporting
nations including the United States and Brazil.
Imports in the first five months of the year reached 37.12
million tonnes, 20 percent higher than the same period of last
China produces around 13 million tonnes of soybeans, all of
which go to the food sector to make soymilk, tofu and other
(Reporting by Dominique Patton; Editing by Subhranshu Sahu)