July 7, 2006

 

China soy prices continue to slide, demand sluggish

 

 

Soy prices in China's major producing regions fell slightly this week despite gains in soy futures on the Chicago Board of Trade.

 

The market did not see domestic demand recover, while oversupply persisted, analysts said.

 

In Heilongjiang, China's largest soy-producing province, prices of average quality soy fell by RMB20 on average in two main soy trading centres.

 

In Harbin, the provincial capital, prices were quoted at around RMB2,280-RMB2,300 a tonne while those in the north-eastern part of the province were around RMB2,200-RMB2,240/tonne.

 

Prices fell RMB20 to around RMB2,400-RMB2,440/tonne in Jilin province, another major soy-producing area in China's north-east.

 

"Abundant supplies and sluggish demand prevented China's soy prices from increasing in step with rising soy futures (prices) on CBOT," said Zhang Liwei, an analyst at the China National Grain & Oils Information Centre.

 

"Farmers in Heilongjiang still hold around 20 percent-30 percent of the crop in stocks, which means supplies will remain strong in the near future," he added.

 

"Rapidly increasing import arrivals in recent months also put pressure on soy prices," said Zhang.

 

COFCO Futures Co said that total import arrivals of soy reached 3.39 million tonnes in June while total arrivals in April-June hit 9.09 million tonnes, compared with 7.21 million tonnes in the same period of last year.

 

China National Cereals, Oils & Foodstuffs Corp, a major grains trading company, holds a controlling stake in COFCO Futures Co.

 

With soy futures prices on CBOT seeing solid gains in the past week, prices of the arrivals in August and September would probably rise as well, so a rebound in domestic soy prices can be expected by then, Zhang added.