April 25, 2011

China's soy prices decrease amid poor margins for crushers

Soy prices in China's major producing areas and ports softened in the week to Friday (Apr 22), as more crushers halted operations due to poor margins, resulting in lower demand.

Prices in the northeastern Heilongjiang province, the nation's top producer, fell about RMB20 (US$3.07) a tonne to RMB3,780-RMB3,840/tonne (US$580-US$589). Import prices at major ports were down RMB50/tonne (US$7.67) at RMB4,100/tonne (US$629).

However, the government's purchasing programme and a significant drop in planned 2011 soy acreage curbed losses.

As of April 15, China National Grain Reserves Corp. had purchased 2.8 million tonnes from farmers, up 100,000 tonnes from a week earlier, according to Chinese Grain Network, a consultancy owned by the state grain stockpiler.

The government's average purchase price was RMB3,800/tonne (US$583).

Heilongjiang, which accounts for about 40% of total output, will likely plant 3.3 million hectares this year, down 26% from last year, the consultancy said in a research note, citing local government data.

Last month, the Ministry of Agriculture said soy acreage nationwide will fall 11.2% this year.

Chinese farmers are planting more corn as its prices have risen about 10% so far this year, compared with a slight decline in soy prices.