China soy prices slightly lower; affected by tumble in futures

Soy prices in China's major producing areas were slightly lower in the week to Friday (Jan 15), weighed down by a tumble in soy futures earlier.

Prices in Harbin in the northeast Heilongjiang province were between RMB3,600-RMB3,800/ tonne (US$527-US$557) compared with RMB3,640-RMB3,800 (US$533-US$557) a week ago.

The People's Bank of China's sudden move to increase the share of deposits banks are required to park at the central bank by 50 basis points signalled a tightening monetary policy, causing profit taking in commodity futures markets.

Weakness in Chicago Board of Trade soy also pressured the local market. However, analysts said there will be limited downside for prices of local crops due to the government's purchase policy and stable demand ahead of the Chinese New Year in mid February.

Cash trading volume was light as farmers were reluctant to sell in expectation of higher prices.

Soyoil prices were lower, along with the big fall in futures markets.

The National Development and Reform Commission, the country's economic planner, said over the weekend that the government would release state reserves when necessary to stabilise soyoil prices, which have risen a lot recently due to heavy snowfall that blocked transportation.

Meanwhile, soymeal prices were lower as processors increased production due to more soy supply in producing areas. Some big processors in the northeast can receive government subsidies for buying local crops.