January 4, 2011

China's soy prices remain flat amid weather woes

Soy prices in China's major producing areas were mostly unchanged in the week to Friday (Dec 31) amid sluggish trade, as heavy snow disrupted transportation across northeastern China.

Soy prices in Jiamusi in the northeastern province of Heilongjiang were around RMB3,800 (US$576)/tonne, unchanged from a week earlier.

Prices in Zhangjiagang, Jiangsu province, were around RMB4,100 (US$622)/tonne, also unchanged.

Soy farmers have turned more bullish on the market and expect prices to go higher as government purchase policies and rapid gains on futures market underpin prices and expectations. The government purchases soy from farmers at RMB3,800/tonne.

As of December 23, farmers in Heilongjiang province had sold 3.15 million tonnes of soy, accounting for 68.5% of their stocks, according to the local grain administration bureau.

Crushers have slowed purchase in major producing areas as snow hampered transportation, analysts said.

With soy stocks at major ports around 6.5 million tonnes, the supply of soy is also sufficient.

An auction of 191,517 tonnes of soy from Heilongjiang's provincial reserves Friday failed to attract any bids, the fourth time the Heilongjiang government's soy auctions has attracted no bidders, due to ample supply and offer prices that are considered too high.

The Chinese Ministry of Agriculture has said it will urge farmers to plant more oilseeds, including soy and rapeseed, to raise the nation's self-sufficiency level for vegetable oil to more than 40% by 2015 from current 34%.

The self-sufficiency ratio for soy is only 30%.