May 26, 2008

China soy stays weak on ample supply, grains bullish

China expects the soy and soy oil market to stay bearish in the coming week due to ample stocks, while grains are seen to remain bullish as demand picks up.

Chinese crushers were not interested to buy more soy as freight rates remained strong and domestic stocks were high, the China National Grain and Oils Information Center (CNGOIC) said Friday.

Soy plants were running at lower capacity on poor margins while demand for imported soy in the coming weeks was expected to remain weak, the centre said.

Soy oil supplies were sufficient while demand stayed weak.

China's soy oil imports were expected to surge again in May after 300,000 tonnes of imports in April, leading to a surplus which was expected to be short term.

Higher costs of soy have pushed up soymeal prices and strong demand from breeders would continue to boost demand in future weeks, the centre said.

Meanwhile, China's wheat market remained strong as demand is expected to get better.

As farmers are harvesting the new crop and expecting a bumper harvest, Beijing this week published its minimum price between RMB1,420 (US$205) and RMB1,540 (US$222) per tonne.

The prices were 3 percent higher than it offered earlier this year, but still 3 percent lower than current market prices.

Corn stayed strong as processors, which were unable to get enough corn, had raised their prices, resulting in a record high price at the major port of Dalian.

Weak demand seen from quake-hit Sichuan, the country's largest pork producer, was likely to support a stable price in the area.