June 6, 2011

China's soy prices mixed; farmers' stocks low

Soy prices in China were mixed in the week to Friday (May 3), with domestically produced soy purchase prices increasing as farmers' inventories fell, while excess supply weakened imported soy.

The average price in the major producing province of Heilongjiang rose about RMB20-40 (US$3-6)/tonne to RMB3,800-3,840 (US$586-593)/tonne, while import prices in major ports were about RMB3,960-4,000 (US$611-617)/tonne, down about RMB40 (US$6)/tonne.

High port inventories of more than six million tonnes, in addition to sales of more than two million tonnes of soy from state reserves, pressured import prices, analysts said.

Crusher profit margins have turned negative since December, when the government ordered price caps on soyoil to curb inflation. Before that, margins were positive for around 18 consecutive months, according to reports.

Soaring pork prices prompted hog raisers to produce more, stimulating demand for soymeal, the second most widely used commodity in animal feed.

Hog and pork prices have risen about 20% this year, according to government figures.

China consumed 35 million tonnes of soymeal in 2010, an increase of 13% from 2009, the Ministry of Agriculture's National Feed Work Office said last week. Corn consumption for animal feed totalled 74.7 million tonnes last year.