January 13, 2006

 

China soybean prices steady; drop in buying by processors
 

 

Soybean prices in China's major soybean-producing regions remained steady in the week to Friday, while buying by processors slowed on expectations of lower prices next month.

 

In Harbin, the capital city of Heilongjiang province - China's largest soybean-producing region - prices of average quality soybeans were unchanged from the previous week at about RMB2,520/tonne.

 

In China's north-eastern Jilin province, prices were about RMB2,580/tonne, almost unchanged from the previous week.

 

Losses in soybean futures on CBOT throughout the week overshadowed the spot market.

 

"Processors are also foreseeing a lower price in April, when farmers sell out most of local output, and imports play a larger role," said Wang Shiliang, an analyst with Jilin Grains Center.

 

Reports of new bird flu outbreaks and human fatalities due to the virus this week also weighed on local soybean prices, as processors did not want to build up inventories.

 

"Meanwhile, demand for soymeal is decreasing, as more poultry is being slaughtered for the Lunar New Year (at the end of January)," Wang said.

 

Soymeal, a byproduct of soybeans, is usually used as animal feed in China. Soybean prices will probably stabilise around current levels by the end of the month, said analysts.

 

"However, if farmers start selling stocks in February, a price drop seems inevitable," Wang said.

 

Industry insiders said farmers sold only about 40 percent of total production so far. Since December, soybean prices in China have risen due to an increase in demand for soymeal and fewer reports of bird flu cases.