Beijing has countered claims that its reliance on soyoil imports leaves it in a vulnerable position in a dispute with Argentina, the biggest exporter of the vegetable oil, saying China has ample supplies in store.

The China National Grain and Oils Information Centre, the country's farm commodities bureau, stopped short of confirming trade estimates that the country may have up to 4m tonnes of soyoil in store, twice the usual levels of 1.8m tonnes.

However, in a weekly report, the bureau said the stocks were sufficiently large, at a time of soft domestic demand, to prevent any restrictions introduced on imports from Argentina leading to a market squeeze.

The briefing follows comments by observers, including analysis group Oil World, that Argentina's top world ranking among soyoil exporters gave it strong leverage over China, the world's biggest importer of the vegetable oil.

Prices rise

Nonetheless, soyoil prices continued to tick upwards on China's Dalian exchange on Friday, closing up 0.6% for May delivery, their highest finish for a spot contract in nearly three months.

World's major soyoil importers, 2009-10 (year-on-year change)

1: China, 2.30m tonnes (-4.2%)

2: India, 1.4m tonnes (+16.7%)

3: EU, 450,000 tonnes (-25%)

4: Morocco, 360,000 tonnes (unchanged)

World, 9.07m tonnes (-0.8%)

Source: USDA

And the CNGOIC reported that a rise in palm oil prices in sympathy with soyoil – the two vegetable oils are interchangeable for some uses – had led some buyers to run down stocks at ports, which had fallen to about 500,000 tonnes over the past week, rather than make new purchases.

The briefing also acknowledged rumours that China was poised to restart imports of corn, and noted a continued rises in domestic  prices, which have topped 2,100 remninbi ($308) a tonne in parts of the country.

And it forecast continued strong imports of soybeans, at 4.6m-5.0m tonnes in May, compared with an estimated 4m-4.2m last month.

Analysts at Commerzbank said: "Reportedly, Chinese animal feed production should have risen by 5.6% year on year during the first quarter, pointing to a high need for [imports of] US soybeans."

'Friendly negotiations'

China has cited safety grounds for its curbs on Argentina soyoil imports, noting relatively high levels of solvent residues.

However, the dispute has been seen as part of a broader spat with Argentina, which has imposed anti-dumping restrictions on a range of imported Chinese goods.

Li Jinzhang, China's vice minister of foreign affairs, said on Wednesday that he was confident that the two countries could "resolve the problems through friendly negotiations".

"As two important developing countries, problems of this type or that type in bilateral economic and trade relationships are quite natural," he said.