January 6, 2012

Soy futures on the Dalian Commodity Exchange rose slightly Thursday (Jan 5) on concern that hot, dry South American weather will hurt crops and expectations of strong demand for edible oils ahead of the Lunar New Year holiday.

The most actively traded September soy contract settled 0.1% higher at RMB4,367 (US$693)/tonne, posting a seven-week high for a second consecutive day.

Weather agency Meteorlogix forecast hot, mostly dry weather for parts of Brazil over the next five days, raising concern that the soy crop will be damaged if the persistently dry conditions continue in the coming weeks.

Meteorlogix also forecast hot, mostly dry weather for Argentina over the next seven days that it said would add to stress on developing soy crops.

Brazil and Argentina are the world's No. 2 and No. 3 soy exporters, respectively, behind the US.

Traders said demand for soyoil in China is growing due to the Chinese Lunar New Year holiday, which will be celebrated at the end of January.

China sold more than 1.5 million tonnes of edible oil and 2.6 million tonnes of soy from state reserves in 2011 to limit price increases, the state-backed China National Grain & Oils Information Centre said Wednesday.