February 21, 2011

China's soy prices unchanged amid cautious mood

Soy prices in China's major producing areas were mostly unchanged in the week to Friday (Feb 18), with traders adopting a wait-and-watch stance shortly after the Lunar New Year holiday.

Prices in Harbin in Heilongjiang province were RMB3,760-3,880 (US$572-591)/tonne, unchanged from a week earlier, while imported soy in major Chinese ports including Shandong and Jiangsu were about RMB4,300 (US$655)/tonne, also unchanged.

Traders appear more cautious after consecutive days of decline on the Chicago Board of Trade. Meanwhile, the domestic market remained sluggish as many crushers have been forced to suspend operations due to poor profit margins, analysts said.

The government has told major crushers to hold down prices until March.

Analysts said the prices of locally-produced soy will rebound in the long term, with many soy planters in China turning to corn for higher yields.

An auction of 20,700 tonnes of soy from Heilongjiang's provincial reserves failed to attract any bids Friday. Heilongjiang has sold a combined 167,000 tonnes in nine auctions since December.

China produced about 15 million tonnes of soy in 2010, up just 0.7% compared with 2009, the Chinese Grain Network said in an output estimate report published Friday.

Meanwhile, soy demand is expected to rise by 8.3% in the crop year ending September 30, indicating more imports will be needed, it added.

As of February 15, China Grain Reserves Corp had purchased 1.9 million tonnes of soy from farmers for stocks, the grain network said.