BEIJING Jan 12 China Grain Reserves Corp
(Sinograin), which manages the state grain reserves, will expand
its commercial operation of soy crushing to profit from the
country's rising demand for cooking oils and animal protein,
according to analysts and local media reports.
The expansion will enable the state-owned company to compete
for market share with Singapore-based Wilmar International
, which now has the biggest crushing capacity and
market share of consumer pack edible oils in the country, the
world's top soy importer.
Sinograin Oils Corp, which was set up in 2008, plans to
expand its soy crushing capacity to 6 million tonnes in 2012,
with 2 million tonnes of refined soyoil production, aiming for
more than 10 percent of market share, the China Business News
cited its president Liu Jianmin as saying.
The state-owned company began to sell its own brand consumer
pack soyoil to supermarkets late last year and aims to sell
200,000 tonnes in 2012, the People's Daily reported.
"Sinograin has the advantage in competing with Yihai Kerry.
It can play with the state reserves of soybean and edible oils"
for more market share, said one industry analyst. Yihai Kerry is
Wilmar's China operation.
Last year, to ease food inflation, Beijing had offered
domestic soy and soyoil reserves at a discounted price to some
commercial crushers to help cap food inflation and such
operations could shift to Sinograin alone in the future, said
Wilmar has been restricted from further expansion of its soy
crushing capacity after Beijing moved to limit market share by
foreign companies to ensure its food security.
Beijing has also restricted foreign investment in refinery
capacity of soyoil, palmoil, rapeseed oil, peanut oil,
cottonseed oil as well as sunflower oil from this year,
according to the guidance on foreign investment issued by the
State-owned or private companies can still expand, although
the crushing industry faces excessive capacity, with about half
capacity not operating. Soy crushing capacity is forecast to
increase by 12.5 million tonnes this year to 125 million tonnes.
Sinograin currently runs soy crushers in the cities of
Dongguan, Zhanjiang and Rizhao, south of Beijing. The company is
also expanding in the northern cities of Tianjin, Tangshan,
neighbouring Beijing as well as Xinzheng in central Henan
province. The expanded capacities will come onstream this year,
Besides its commercial role, Sinograin also manages the
state silos of grains, soy and edible oils. The company bought
more than 3 million tonnes of U.S. corn last year to help refill
depleted state reserves.
It also purchased 11.8 million tonnes of domestic corn, 2.94
million tonnes of soy, 6.54 million tonnes of rice and 3.37
million tonnes of rapeseed for state reserves from farmers last
year, the company said in a report posted on its website
The company releases these reserves whenever domestic
supplies are tight and prices rise above the level the
government can tolerate.
Last year, it released from state reserves of 3.54 million
tonnes of corn, 7.63 million tonnes of rice, 18.53 million
tonnes of wheat to the domestic market. It also sold 2.53
million tonnes of soy to some crushers, according to the report.