July 11, 2011

Soy prices in China were largely stable in the week to Friday (Jul 8), as crushers stayed on the sidelines due to weak margins, but purchase by traders and concerns over output prevented prices from falling.

The average price in the top producing province of Heilongjiang, which accounts for about 40% of the country's output, was flat at RMB3,820-3,860 (US$591-597)/tonne. Import prices in major ports were about RMB3,950 (US$611)/tonne, also flat from a week earlier due to supply pressure.

Prices of homegrown non-genetically modified soy were largely unchanged this year, compared with a 7% decline in imported soy prices.

"Soy prices are likely to fall in July and August as consumption is now off-season," the Beijing Municipal Administration of Grain said in a report.

Prices may rebound in September, as arrivals of new-crop soy usually spark a buying spree, it said.

Soy area this year is likely to fall 6.8% to 8.2 million hectares, while output is expected to drop 7.9% to 14 million tonnes, the state-controlled China National Grain & Oils Information Centre said in its May estimate.

However, many analysts expect output to fall more than 15% this year, as acreage in Heilongjiang is expected to drop around 20% this year, losing ground to corn.

The reduced acreage will underpin soy prices in the long term, as demand for local non-genetically modified soy is still rising.