April 6, 2007

 

China soybean prices mixed; may fall slightly next week

 

 

Soybean prices in China's major producing regions were mixed in the week to Friday, and traders see further downside pressure next week.

 

Cash prices rose Monday and Tuesday, along with gains in futures, after the US Department of Agriculture said last Friday the country's acres of soybean this year will be lower than 2006.

 

However, higher domestic soybean prices deterred crushers from buying much, and prices soon retreated, market participants said.

 

In Harbin, the provincial capital of Heilongjiang province, China's largest soybean growing region, prices of average-quality soybeans rose slightly to RMB2,920-2,950/tonne, versus RMB2,900/tonne a week ago.

 

Prices in the north-eastern part of the province were in the range of RMB2,800-2,820/tonne, slightly lower from RMB2,840/tonne a week earlier.

 

"There weren't much domestically-grown soybeans left and the remaining parts are of low-quality, so crushers turned to buy imports after cash values rose," said Wang Shiliang, a trader at Jilin Grains Centre.

 

"Prices are likely to fall further next week, amid shrinking buying, but a sharp decline is unlikely," Wang added.

 

Analysts said cash values may also feel pressure from a possible correction in futures prices in the coming week.

 

"Dalian futures prices are a bit higher than CBOT soybean futures, so if there is a downward correction in CBOT, we're likely to see more losses in futures here, which will weigh on cash values as well," said a trader based in Beijing.

 

COFCO Futures Co. estimated Thursday import arrivals in March were about 2.22 million tonnes, and expected higher imports in April.

 

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