China, the world’s largest consumer of soybeans, plans to buy at least 3 million metric tons of beans harvested locally as slumping prices reduce farming incomes and discourage planting, two industry executives said.

 

The plan will double the amount the government wants to buy from growers in northeast China, said the executives, who declined to be identified as they aren’t authorized to speak to the media. The 3 million tons represent about 18 percent of the country’s total crop, and about a third of the output from the main growing region.

 

China is buying domestic beans to prop up local prices, which have slumped 25 percent since September. The government’s price support plan may spur Chinese crushers to buy beans from the U.S. and other countries, where it is cheaper.

 

“While U.S. growers will no doubt benefit from more orders from China, the government may have little choice” other than to carry out its price support plan for local farmers, Nie Ben, manager at Shanghai Continent Futures Co., said by phone from Dalian.

 

The Number 1 soybeans for May delivery in Dalian, a contract for non-genetically modified domestic beans, gained 1.4 percent to 3,262 yuan a ton. The futures have tumbled 38 percent from the July 3 record of 5,241 yuan. Prices for imported soybeans at Dalian have fallen below 3,000 yuan a ton, Nie said.

 

Price Support

 

Prices of the government purchases haven’t been decided, the executives said. The National Development and Reform Commission, China’s top economic planner, had said Oct. 20 the government would pay 3,700 yuan a ton for soybeans, That would make the total purchase worth 11.1 billion yuan ($1.6 billion).

 

Imported soybeans, which are mainly gene-altered, are restricted to be used only as cooking oil and soybean meal. They also yield more oil than domestic beans, which are mainly used in making food such as tofu, Nie said.

 

The reserve purchases are led by China Grains Reserve Corp., or Sinograin. Cofco Co. and JiuSan Oils and Grains Industries Group Co. may be asked to process 1 million tons of soybeans owned by the state’s reserves, the executives said.

 

China’s soybean output may jump 30 percent from a year ago to 16.5 million tons, according to the China National Grain and Oils Information Center.