April 18, 2008

China soy prices higher, crushers buy amid low inventory

Soy prices in China's major producing regions gained in the week to Friday, as higher prices of Chicago Board of Trade soy futures prompted soy crushers to buy amid low inventories.

In Heilongjiang province, China's largest soybean-growing region, crushers bought average quality soybeans at around RMB 4,700 - RMB 4,900 a tonne, up RMB 100 - RMB 300 from a week earlier.

In nearby Jilin province, another major production region, prices were around RMB 5,000 per tonne, about RMB 200 higher than a week ago.

"Generally, soy crushers' inventory level is quite low, so their buying interest continued driving prices higher," said Tu Xuan, an analyst with agricultural commodities consultancy Shanghai JC Intelligence Co.

Tu added that prices are likely to consolidate at high values at least until the end of the month, and any further gains for CBOT soy would likely provide upward momentum for domestic cash prices.

The China National Grain & Oils Information Center said in its weekly report Friday that gains in CBOT soy this week motivated crushers to purchase, anxious about possible further gains, but market participants still hold divergent views on the price outlook.

Meanwhile, domestic soy oil demand is rising steadily, and as soy oil's price is even lower than its production cost, it is likely to rise over the next couple of weeks, the CNGOIC said in its report.

RMB 1 = US$0.14 (April 18, 2008)