June 16, 2008

China soymeal market to stay bullish on tight supply

China's soymeal prices are expected to stay strong next week following a shortfall in supplies, the China National Grain and Oils Information Centre (CNGOIC) said.

The centre reported that soymeal demand was expected to stay strong despite record physical and futures prices.

Chinese crushers have increased production since June, but most supplies were for contracts already signed, keeping the market tight and forcing some feedmills and merchants to pay more.

However, crushers had not increased soy imports much as large arrivals were expected in coming months, the centre said.

China's soy oil trade was active this week as prices in coastal areas climbed, in line with international prices. Yet ample stocks were unlikely to fuel demand in the short term, observers said.

Meanwhile, the outlook for wheat stayed strong on expectations of better demand from flour mills.

The corn outlook also stayed bullish as merchants in the major producing north were holding their grains on anticipated higher prices due to declining stocks.

Corn prices in the consuming south were expected to remain strong due to higher transport costs.

However, corn prices are expected to be capped by Beijing's reserve sales.