May 12, 2006

 

China soybean prices up; taking cues from futures market

 

 

Soybean prices in China's major producing regions rose steadily this week, compared with prices before the week-long holiday last week, thanks to the uptrend of soybean futures on both local and international markets, analysts said.

 

"The rising soybean futures prices on CBOT and the local exchange were the main reason for higher physical prices," said Zhang Liwei, a soy analyst at the China National Grain & Oils Information Center.

 

"Trading on the spot market was still inactive," he said.

 

In Heilongjiang province, China's largest soybean-producing region, prices of average quality soybeans ranged from RMB2,220/tonne to RMB2,320/tonnne, up by about RMB40/tonne in most places.

 

Prices in Harbin, the provincial capital, were quoted as high as RMB2,300-2,320/tonne.

 

In Jilin province, prices were RMB20-40/tonne higher than two weeks ago at RMB2,440-2,480/tonne.

 

Although feed demand slowly picked up, analysts said the higher prices did not reflect supply and demand changes.

 

"Prices of arrivals, though still little changed at the moment, are expected to rise in June, and this has boosted local prices," said a Shanghai-based analyst.

 

He added that as the rise is based on gains on the futures market, it will be sensitive to the changes of soybean futures, until there is a substantial recovery of local feed demand.

 

COFCO Futures Co. said arrivals reached 976,000 tonnes in the first ten days of May, and estimated total arrivals in May are likely to reach 2.8 million tonnes.

 

The large amount of imports, considering total arrivals of 2.67 million tonnes in April, will put a lot of pressure on the local market.

 

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