April 20, 2009

China's soy prices in the major producing areas were lower in the week to Friday (April 17), as farmers were more eager to sell ahead of the spring planting season.

Soy prices in Jiamusi in Heilongjiang, a major producing province, were around RMB3,180-RMB3,240 a tonne, compared with RMB3,240/tonne a week ago. Prices in Suihua in the same province were RMB3,260-RMB3,300/tonne, falling from RMB3,300-RMB3,330/tonne a week ago.

Farmers were willing to sell soy at lower prices as they need to cash in ahead of the upcoming planting season, said analysts.

Soy oil prices were higher, along with the rise in futures prices.

First-grade soy oil in Zhangjiagang in Jiangsu province was around RMB7,350/tonne, versus around RMB6,900/tonne a week ago.

In Dongguan in Guangdong province, the prices were RMB7,150-RMB7,400/tonne, compared with RMB6,800-RMB6,900/tonne a week ago.

The market is becoming more optimistic on consumption as China's recent economic data showed the worst part of the downturn may have passed following a huge wave of government spending.

"Some (vegetable oil) traders started to build up their stocks as the market is becoming optimistic," said Xu Wenjie, an analyst with Tianma Futures.

Soymeal prices were slightly lower as supply increased while demand remained weak.

In Lianyungang in Jiangsu province, soymeal prices were RMB3,290-RMB3,310/tonne, compared with RMB3,320/tonne a week ago, while in Dongguan, prices were RMB3,250-RMB3,300/tonne, compared with RMB3,300-RMB3,350/tonne a week ago.

Soy processing plants increased production due to good profits brought by the surge in soy oil prices, thus increasing soymeal supply, said China National Grain and Oils Information Centre.

Meanwhile, traders and feedmeal companies stayed on the sidelines as they still have stocks on hand, it added.

Analysts expect soymeal prices to fall in the coming weeks as feedmeal demand hasn't picked up.