April 4, 2011

Lower China soy prices; long-term outlook stays positive

Soy prices in China's major producing areas and ports fell slightly in the week to Friday (Apr 1) due to a lack of confidence among crushers amid recently slumping commodity prices, but the long-term outlook remains positive.

Soy prices in northeastern China's Heilongjiang province fell about RMB30-40 (US$4.59-US$6.12) per tonne from a week earlier to around RMB3,800/tonne (US$581/tonne), while imported soy prices fell around RMB50/tonne (US$7.64) to RMB4,200/tonne (US$642/tonne).

The government's soy purchases from farmers for reserves continued to support prices, the China National Grain Reserves said on Friday.

So far, the state stockpiler has bought 2.2 million tonnes of soy that were harvested last year from farmers, it said. Soy prices are very likely to rise this year as the acreage in China and the US were forecasted to decline.

An auction of around 20,000 tonnes of soy from Heilongjiang's provincial reserves attracted no bids on Friday, reflecting weak market sentiment.

Domestic crushers have demonstrated greater willingness to hike prices and this could result in a rebound in soyoil prices soon, as government price-capping measures on edible oils introduced late last year have expired, analysts said.