March 17, 2006

 

China soy prices fall as farmers offload stocks

 

 

Soybean prices in China's major producing regions continued to fall this week, with farmers keen to sell some of their stocks in the runup to the spring plowing season, analysts said Friday.

 

"Farmers realize it is time to sell as they need cash, and prices are unlikely to rise like what happened in the past two years," said Wang Zhengang, an analyst at the China National Grain & Oils Information Center.

 

Meanwhile, crushers welcomed farmers' eagerness to sell, as crushing profits have been very slim with soymeal prices falling alongside shrinking demand for animal feed.

 

In Heilongjiang province, China's largest soybean-producing region, prices of average quality soybeans fell RMB40-RMB60 (US$5-US$7.5) to be quoted around RMB2,380 (US$296.35)-RMB2,420 (US$301) a tonne.

 

Prices in Jilin, another major producing province in the northeast, were RMB30 (US$3.73) lower than the previous week at around RMB2,520 a tonne (US$313.8).

 

Farmers are now holding about 40 percent of their stocks, according to the latest survey, Wang said.

 

"However, farmers said they would not sell if prices fall below RMB2,360/ton,(US$293.86) their psychological bottom, as indicated by the survey," Wang said.

 

He added that the survey shows that a smaller soybean acreage and a bigger one of corn can be expected this year, though the final data are not out yet.

 

"If the spread of bird flu can be controlled by the end of the month, and feed consumption can accordingly pick up, soybean prices may be able to at least stabilize at current levels," he said.

 

Meanwhile, COFCO Futures Co. estimates soybean arrivals reached 760,000 tonnes in the first 10 days of March, and total arrivals will amount to 2.3 million tonnes this month.

 

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