China said that it will reduce its import duties on soybeans to one pct from three pct currently, effective Oct 1, in a temporary move to stabilize food prices. The central government made the announcement on its website in a notice drafted by eight ministries and departments led by the state planner – the National Development and Reform Commission – and including the Ministry of Commerce and Ministry of Finance.

China’s on-year inflation rate rose to 6.5% in August from 5.6% in July, the fastest pace in more than 10 years, mainly driven by an 18.2% increase in food prices. The National Development and Reform Commission said last week that the country will freeze all government-controlled prices until the end of the year, in the central government’s latest effort to combat accelerating inflation.

In related news, China increased purchases soyoil by 74% over the first 8 months of 2007, according to data from the China’s customs office. Soyoil imports for the January to August period surged to 1.6 million tonnes. Around 260,000 tonnes of the commodity were purchased in August, an increase of 30% from July.

Monsanto and FOSS, a company that provides analytical instruments for the food, agricultural, chemical and pharmaceutical industries, announced last week that they have developed a system that could result in the establishment of an analytical measure of the specific components in soybeans.

The first product in the collaboration is a calibration system used to measure the linolenic acid content of soybeans in order to identify grain that, when processed, will provide food companies an oil that does not require hydrogenation, said Monsanto.

Linolenic acid, which is generally found at high levels in most soybeans, reduces the shelf life and stability of products made from soy oil. To overcome this problem, soyoil is often partially hydrogenated to reduce linolenic acid levels. But this, in turn, produces trans-fatty acids. Plant breeders have been working to develop a method to eliminate the need for hydrogenation.

According to Monsanto, the new calibration system, which is used in near infrared grain analyzers, includes software that has been developed over two years, by accumulating data from commercialized industry low linolenic soybean products, including Vistive soybeans. The system claims to allow grain elevators to more easily distinguish low-linolenic soybeans from commodity soybeans.

Louis Dreyfus completed construction works on its 88 million gallon biodiesel plant in Claypool, Indiana. The company plans to start soybean crushing in late September while the manufacturing of biodiesel is to start in early October. The plant is to crush 50 million bushels of soybeans annually.

Owensboro Grain started production at a 50 million gallon plant in Owensboro, Kentucky. The facility is to process soybeans. The company already produces 75 million gallons of soyoil annually at its oil mill at the same site.

Crimson Renewable Energy, a limited property of Crimson Resource Management, operating oil and gas production assets, started construction on a 30 million gallon biodiesel plant in Bakersfield, California. The soyoil-processing facility is to be completed in spring 2008.

MapleRiver Energy LLC started construction on a 5 million gallon biodiesel plant including a soybean crushing facility near Galva, Iowa. Some 3.5 million gallons are to be made from 3 million bushels of crushed soybeans while the remaining 1.5 million are to be made from corn oil. The $20 million plant is scheduled to start production in the early fall of 2008.

Soy Energy LLC broke ground on a 30 million gallon plant in Marcus, Iowa. The soyoil-based $50 million facility is to start production in early 2008 and is to use biomass pellets as primary energy source. The company said it plans to add a $35 million crushing facility by 2010.

Meanwhile, 177,977 tonnes of biodiesel were produced domestically in July, up from 135,344 tonnes in June, U.S. Census’ data showed. Of the July output, some 157,168 tonnes (June: 116,453 tonnes) were made from soyoil and 5,269 tonnes (June: 5,372 tonnes) from inedible tallow and grease. That brought total 2007 biodiesel production to 846,140 tonnes, of which 742,016 tonnes is from soyoil and 26,535 tonnes from inedible tallow and grease.

Agriculture Secretary Mike Johanns resigned September 20 –– effective immediately –– amid reports he will run for a Senate seat being vacated by Chuck Hagel (R) in his home state of Nebraska. Johanns has not officially confirmed those reports.

President Bush named Deputy Agriculture Secretary Chuck Conner to serve as acting secretary. Conner, who has been instrumental in developing and promoting the Bush administration’s farm bill proposals, is considered by many to be the front runner to be nominated to replace Johanns.

The soy complex was up on September 20. Speculators were fairly heavy buyers of soybean complex futures amid news that China would cut its soybean import duty from 3% to 1% and a sharp increase in corn prices that undermined soybean’s bid for 2008 U.S. acreage. China is getting concerned about food price inflation, which, if anything, argues for China to import more soybeans and export less corn. The soybean complex continues to garner near-term support from high EU wheat prices that bolsters soybean oil prices and petroleum futures that continue to make new highs that pull soybean oil futures higher to rein in biodiesel production. November bean futures closed up $6.43, finishing at $363.21; January gained $6.71, closing at $368.99; and March was up $5.88, ending at $371.48. October meal increased $9.26 closing at $303.46; December was $9.92 higher, finishing at $309.97; and January meal closed up $8.93 ending at $312.06. October oil closed $3.53 higher to finish at $869.49; December was up $5.29, closing at $880.52; and January gained $8.16, closing at $889.34.

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