August 16, 2010

China still keen on US soy

China's soy buyers kept strong interest in forward-month US soy cargoes, which will keep offering positive crushing margins, the China National Grain and Oils Information Centre (CNGOIC) said.

US December soy cargoes were quoted at US$477 per tonne C&F after import taxes, which implies an expected RMB166 (US$24.4) per tonne in profit in arbitrage on domestic futures markets, the centre said in its weekly report.

Record import levels in June and July have led to high soy stocks, which reached 6.8 million tonnes, or 3.3 million tonnes more than the year-ago level, it said.

Both physical soymeal and soyoil prices fell slightly last week, but crushers were unwilling to lower their products further on expectations of better demand next month.

State-owned firms purchased 35 million tonnes of new wheat as of the end of July, the volume was 7.7 million tonnes less than the year-ago period. Rising domestic prices are blamed for the purchases at the government-set prices.

Heavy rains in the northeast provinces of Jilin and Liaoning, while creating floods in some areas, helped corn grown on high lands, and analysts expect this year's output could increase by 10-15 million tonnes.