February 18, 2004

China Soy Prices Up As Poultry Industry Recovers From Bird Flu

Soy prices in China rose slightly as the spread of bird flu slowed, fueling speculation that the poultry industry may soon recover.

Soymeal for May delivery on the Dalian Commodity Exchange rose to 2,777 yuan ($335) a metric ton yesterday, from 2,748 yuan on Friday, while soybeans rose 0.6 percent to 3,358 yuan a ton. Outbreaks spread to a third of China's 33 provinces within the first week of the epidemic. Since then, three more provinces reported outbreaks.

"The outbreaks are slowing, so this should stabilize prices for the next one to two months, after which we'll see prices back on an uptrend," said Larry Li head of oilseed trading at Beijing Xinlong Harvest Trade Co. "People don't see this so much as a new problem as they do better reporting of a problem that comes around every year."

Concern that culling of farm fowl, to prevent the spread of the H5N1 virus, would cut demand for feedmeal snapped a rise in China's soy prices when the country confirmed its first outbreaks on Jan. 27. Dalian soymeal prices fell 6.5 percent and soybean prices fell 5 percent between Jan. 16, the last day of trading before China announced its first case of the disease, and Feb. 4.

"Sales of poultry are rising again as the initial fear of bird flu is starting to fade," the China National Grain & Oils Information Center, a State Grain Administration affiliate, said in a report.

Fourteen of China's provinces have reported suspected or confirmed outbreaks of the disease. The Chinese government has said the country has no human cases of bird flu, which has jumped to people in Vietnam and Thailand, killing 20.