April 27, 2009
China soy prices lower, but government policy minimises fall
Soy prices in China's major producing areas were slightly lower in the week to Friday (April 25) but were supported by the government's extension of soy purchases.
Soy prices in Jiamusi in Heilongjiang, a major producing province, were around RMB3,200 a tonne, compared with RMB3,180-RMB3,240 a week ago. Prices in Suihua in the same province were at RMB3,260/tonne, falling from RMB3,260-RMB3,300/tonne a week ago.
The State Council said Wednesday China will extend government purchases of soy to end-June from end-April to stabilize agricultural production and prevent a further decline in prices of agricultural products.
Analysts said although the move is unlikely to help much in fulfilling the government's plan to purchase 6 million tonnes of soy from last year's harvest by the end of April, as it's hard to improve the crop's quality to meet government standards, farmers will be reluctant to sell in expectation of higher prices.
The government is yet to buy another 1.5 million to 2 million tonnes of soy from major producing areas to meet its earlier purchase target.
Soyoil prices were higher on rising futures, but traders and end-users were more cautious on buying due to expectations of more supply.
First-grade soyoil in Rizhao in Shandong province was around RMB7,250-RMB7,350/tonne, up from RMB6,950-RMB7,250/tonne a week ago.
In Dongguan in Guangdong province, prices were RMB7,350-RMB7,500/tonne versus RMB7,150-RMB7,400/tonne a week ago.
The Ministry of Commerce Friday warned Chinese companies to slow soy and rapeseed imports to avoid risks associated with large inventories.
It said edible oil and oilseed stocks at Chinese ports were too high due to heavy imports between January and April.
Soymeal prices were lower as traders and feedmeal companies stayed on the sidelines amid expectations of lower prices.
In Lianyungang in Jiangsu province, soymeal prices were at RMB3,190-RMB3,290/tonne compared with RMB3,290-RMB3,310/tonne a week ago, while in Dongguan, prices were at RMB3,100-RMB3,230/tonne compared with RMB3,250-RMB3,300/tonne.
A large amount of soy imports and increasing production at soy processing plants will result in a soymeal surplus in some areas, pushing prices lower, the China National Grain and Oils Information Centre said in its report.
