US soy futures may recoil to US$9.80 on Chinese demand

US soy futures may rally to US$9.80 per bushel by end of July on increasing Chinese demand.

China's voracious appetite for foreign soy is anticipated to increase as imports are more economical compared with domestic supplies. A stronger yuan is likely to widen the gap in profitability between crushing foreign and domestic crop.

China's move last June 19 to allow more flexibility in its currency led to the biggest increase in the yuan in half a decade this week.

The country lifted purchases of the oilseed in the past two weeks to between 17 and 25 cargoes, or as much as 1.5 million tonnes, as crushers expect processing margins to improve, according to a range of estimates from three executives familiar with the trade.

The cargoes were sourced mostly from Latin America except for two from the US Pacific Northwest. Most shipments will be from July to September, with a few in October and November.

On June 22, Scott Briggs, agricultural commodities strategist at Australia & New Zealand Banking Group Ltd., said soy futures may rally to US$10 a bushel within the next two weeks on ''short-term tightness'' and speculative covering.