May 30, 2011

Soy prices in China's major producing areas were stable in the week to Friday (May 27), as many traders and crushers sit on the sidelines due to poor margins.

Demand from crushers remains low, with port stocks rising 67,000 tonnes from a week earlier to 6.3 million tonnes, the Chinese Grain Network, a consultancy owned by China Grain Reserves Corp or Sinograin, said Friday.

The average price in the major producing province of Heilongjiang hovered around RMB3,800 (US$586)/tonne, unchanged from a week earlier, while prices in major ports were about RMB4,000 (US$617)/tonne, also flat.

High port inventories and a possible sale of more than two million tonnes of soy from state reserves to selected crushers will continue to pressure prices lower, analysts said.

China plans to sell 2.12 million tonnes of soy from state reserves to five crushers at RMB3,300-3,500 (US$509-540)/tonne to increase domestic supply, sources said.

In addition, the government will sell 300,000 tonnes of soy in an auction open to all crushers Tuesday, the state-controlled China's National Grain and Oil Information Centre (CNGOIC) said.

China's soy output this year will likely fall to 14 million tonnes from last year's 15.2 million tonnes due to sharply reduced acreage in major producing areas, the CNGOIC said.

But the 1.2 million tonne reduction in domestic output has failed to raise supply concerns as more than 80% of crushing demand is met by imports, which totalled about 54.8 million tonnes in 2010.