January 6, 2006
China soybean prices higher; farmers reluctant to sell
Soybean prices in China's major soybean-producing regions rose in the week to Friday, buoyed by rising soymeal prices as the number of reported bird flu cases fell sharply in the past month.
In addition, farmers are reluctant to sell as they anticipate higher prices - based on the rising trend in both the spot and futures markets - pushing prices even higher, traders said.
In Harbin, the capital of Heilongjiang province and China's largest soybean-producing region - prices of average quality soybeans were around RMB2,520 a tonne, up RMB60/tonne.
In Jilin province, another major soybean production base in northeastern China, prices were from RMB2,560-RMB2,580/tonne, slightly higher from a week ago.
"Farmers are looking at RMB2,600/tonne. They sold some when prices rose a little, but after three days, no one was willing to sell, because they knew prices would rise again," said Wang Zhengang, an analyst with China National Grain & Oils Information Center.
Soybean demand has risen steadily on strong demand from feed producing enterprises, following a sharp fall in the number of bird flu cases in recent weeks. In addition, high futures prices have also heightened people's expectations of higher spot prices, Wang said.
Soymeal, a byproduct of soybeans, is usually used as animal feed in China.
Crushers maintained low inventories of soybeans during the bird flu outbreak, but demand for soymeal has risen now that the Chinese Lunar New Year is approaching.
In Heilongjiang province, farmers sold only 30 percent of total production, while farmers in Jilin province sold 40 percent, Wang said.
"(Soybean) prices may continue to rise slightly before the Chinese Lunar New Year at the end of January, and are likely to increase further thereafter, tracking the rising cost of imported soybeans," Wang said.
However, as in previous years, the rise will probably be mild and no big fluctuations are expected, he said.
