July 24, 2006

 

China soybean prices fall on weak demand, lower CBOT

 

 

Soybean prices in China's major producing regions fell this week on continued weak demand and oversupply conditions.

 

Soybean prices were also pressured by losses on the Chicago Board of Trade, an analyst said.

 

In Heilongjiang, China's largest soybean-producing province, prices of average quality soybeans slipped RMB40-RMB60 in two main soybean trading centres.

 

In Harbin, the provincial capital, prices were quoted around RMB2,200-RMB2,250 a tonne, while those in the north-eastern part of the province were around RMB2,100-RMB2,160/tonne.

 

Prices dropped RMB40-RMB60 to around RMB2,360-RMB2,400/tonne in Jilin province, another major soybean-producing area in China's northeast.

 

"Demand for soymeal remains weak. Major local crushers, losing money because of weak demand, reduced their purchases of soybeans this week," said Zhang Liwei, an analyst at the China National Grain and Oils Information Centre.

 

"The overstocking situation shows no sign of easing. Farmers in north-eastern China still hold 1.2 million-1.5 million tonnes of soybeans, or 15 percent-20 percent of the total crop, in stocks," he added.

 

"Current stocks of imported soybeans are around 3.5 million tonnes," said Zhang.

 

COFCO Futures Co said import arrivals of soybeans are expected to total 2.3 million-2.4 million tonnes for July, compared with 3.67 million tonnes last month.

 

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

 

Zhang said import arrivals of soybeans are expected to be around 800,000-1 million tonnes in the last 10 days of this month.

 

China's soybean imports totalled 14.06 million tonnes in the first half of 2006, up from 12.01 million tonnes in the same period last year, according to customs data.

 

"Soybean prices will not fall too much further, as farmers can barely break even at current prices," Zhang said.