January 29, 2007

China's soybean prices rise; farmers reluctant to sell

Soybean prices in China's major soybean producing regions rose slightly in the week to Friday (Jan 26), shrugging off recent losses in futures because farmers have been reluctant to release stocks.

In Heilongjiang province, China's largest soybean growing region, prices of average quality soybeans in its two main soybean trading centres were an average of RMB20-40 a tonne higher from a week earlier.

In Harbin, the provincial capital, prices were quoted around RMB2,600-2,640/tonne, up from RMB2,600/tonne a week earlier.

Prices in the north-eastern part of the province were at RMB2,480-2,520/tonne, compared with RMB2,460-2,500/tonne in the previous week.

"With only about 30 percent of their total harvest left in stocks, farmers were reluctant to sell," said Zhang Liwei, an analyst at the China National Grain & Oils Information Centre.

Farmers sold most of their total harvest in 2006 as soybean prices have been strong.

Meanwhile, as imported prices of soybeans have been at high levels, oil processing plants prefer to buy more domestic soybeans, pushing up prices on the cash market, said Gu Jianjun, a trader at Jinyuan Futures Co.

However, the rise in domestic soybean prices is likely to be capped, as a stronger yuan will make import prices cheaper, Gu said.