China's soybean sown area declined by 12 percent this year from a year earlier, which experts say will lead to higher prices of soybean products including soy milk and tofu, but will have less effect on edible oil prices.
The country's total soybean sown area dropped to 7.6 million hectares this year, down 930,000 hectares from a year earlier, the National Development and Reform Commission (NDRC) revealed during a media briefing in Beijing on Friday.
Many soybean farmers in Heilongjiang Province, China's main soybean growing region, have shifted to corn, because the earning from corn is 3,000 yuan ($465) per hectare higher than soybean, the Dalian Commodity Exchange said in a research report released last week.
"China's home-grown soybeans, mostly non-genetically modified, are mainly used to make food products such as soy milk and tofu, so the prices of the products will go up due to the decline in the soybean output," Deng Ningning, an agriculture analyst at Shanghai CIFCO Futures, told the Global Times.
"But soybean oil prices won't be affected much, because China mainly depends on imported soybeans to produce edible oil," she added.
China is the world's biggest buyer of soybeans, and relies on imports for 80 percent of its consumption. However, customs data shows that the country's total imports of soybeans declined 8.1 percent from a year earlier to 23.71 million tons in the first half of this year, amid weak demand from domestic soybean companies.
Deng said the lower demand was mainly due to the government's cap on edible oil prices. The NDRC had asked the country's major edible oil producers not to raise the prices for small-package edible oil from last November till June this year.
Guo Qingbao, chief editor of cnyouzhi.com, a Zhengzhou-based soy information provider, estimates domestic soybean processors lose about 300-400 yuan per ton from imported soybeans. Deng said soybean processors are operating at around 40 percent of their processing capacity from the previous 70-80 percent.
The US Department of Agriculture last week lowered the country's annual soybean production estimate to 3.225 billion bushels, down 60 million from the previous forecast due to reduced sown area, and experts believe the lower output will push imported soybean prices higher.
The higher costs, however, are not likely to have a major impact on edible oil prices. "With the easing of China's inflation pressure, we are optimistic of a marginal increase in soybean oil prices later this year," said Deng.
"The price rise will help soybean companies prevent more losses," she said.