June 25, 2007

Outlook for China corn and soy weakens while wheat strengthens

Although China's grain outlook has become more bullish in recent weeks,  that for soy and soy products are still faced with low demand, according to the China National Grain and Oils Information Centre (CNGOIC).

Crushers have not increased their imports significantly even after a decline in Chicago Board of Trade soy prices, the agency noted.

In warehouses, soy stocks are piling up.

The soymeal outlook turned slumped after the previous week's short, strong performance. Demand has not improved much and sales of soymeal were sluggish in most of the country. Meal stocks remained high and prices are unlikely to improve over the next few weeks.

Outlook for corn, which has remained bullish since mid-April also weakened last week. Traders feared that falling Dalian futures prices could trigger sales of corn to the spot market. A significant quantity of low-quality corn has been stockpiled at ports in northern China, which meant these could be released at low prices.

Meanwhile, more feed mills are shifting to wheat and using less corn, boosting the outlook for wheat.