March 24, 2006

 

China soybean prices fall as crushers reluctant to buy

 

 

Soybean prices in China's major producing regions continued to fall this week while trading remained quiet, as crushers were reluctant to buy, analysts said Friday (Mar 24).

 

Most local crushers are losing money in soymeal production because of its falling prices, as the demand for animal feed is still pressured by bird flu concerns, which have led to less poultry consumption.

 

In Heilongjiang province, China's largest soybean-producing region, prices of average quality soybeans fell by around RMB60 to around RMB2,320-RMB2,420 a tonne.

 

Prices in Jilin, another major producing province in the northeast, were RMB40 lower than the previous week at RMB2,480/tonne.

 

"Although the prices are below what farmers can accept psychologically, some are still willing to sell to earn cash," said Wang Zhengang, a soy analyst at the China National Grain & Oils Information Centre.

 

As spring plowing is just around the corner, local farmers are keen to sell their stocks to get cash in order to buy seeds, fertilisers and machinery.

 

Meanwhile, soymeal prices dropped to RMB2,200-RMB2,250 a tonne this week, while a minimum of RMB2,300/tonne can help crushers keep a balanced sheet, said analysts.

 

As crushers look to cheaper soybeans, local soybean prices are heavily weighed on by cheaper imports, whose prices are still falling.

 

"Unless import prices can stabilize or even go up in April, which needs to be led by higher futures prices on the Chicago Board of Trade, pressure on (local) soybean prices won't be relieved," Wang said.

 

COFCO Futures Co., located in Beijing, said arrivals in the month totaled 1.76 million tonnes by Mar 20, and it estimates another 540,000 tonnes are due to arrive by the end of the month.

 

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