March 6, 2006

 

China soybean prices slightly lower despite increased sales

 

 

Soybean prices in China's major soybean-producing regions fell slightly in the week, as farmers finally began to speed up their sales, foreseeing even lower prices in the month.

 

In Heilongjiang province, China's largest soybean-producing region, prices of average quality soybeans were mostly RMB10 lower, at around RMB2,440-RMB2,500 a  tonne.

 

Prices in other major producing provinces, including Jilin province, were also RMB10-20 lower from the previous week.

 

"Farmers finally accepted the negative outlook for soybean consumption, so they decided to turn their stocks to cash as soon as possible to prepare for the spring seeding," said Zhang Liwei, an analyst with the China National Grain & Oils Information Centre.

 

Concerns of bird flu and its impact on soy consumption, as well as crushers' slim profits, if any at all, finally convinced farmers that they would not be selling their stocks at higher prices after the Spring Festival as they had hoped for, bucking the trend seen over the past few years, Zhang said.

 

He estimated that farmers may have sold by now 50 to 60 percent of last year's total output, adding that selling is likely to speed up in March, pushing prices slightly lower.

 

Farmers, he said, will stop selling if prices fall significantly, considering they would also be getting government subsidies.

 

Meanwhile, a recent poll on the growing intention of farmers in Heilongjiang province indicates soybean acreage is likely to drop, while that for corn, wheat and rice will rise. No detailed figures are available.

 

COFCO Futures Co estimates around 1.35 million tonnes of soybeans arrived in China in February, down 300,000 tonnes from January.

 

But it predicts arrivals will rise by one million tonnes from February to reach 2.3 million tonnes, as traders contracted more imports after the Chinese New Year holiday, when local stocks were diminished.

 

China National Cereals, Oils and Foodstuffs Corp., a major grains trading company, holds a controlling stake in COFCO Futures Co.