September 4, 2009

Chinese soy buyers will probably limit their imports in the week ahead, following a slump in domestic soymeal and soyoil prices, according to an official survey by the China National Grain and Oils Information Centre (CNGOIC).

However, the centre said lower imports in August and September as well as a smaller domestic harvest could prompt buyers to resume strong imports later.

China's soy imports in September are expected to be near the same low level as in August, or at about 2.6 million tonnes. The low imports have reduced stockpiles of imported soy at ports.

The fall in Dalian soyoil prices again restrained physical trading of the cooking oil this week but soyoil demand is likely to pick up ahead of the October holidays as merchants stock up their inventories.

Meanwhile, feed mills have restricted from buying more soymeal after the fall of Dalian prices. However, with some crushers halting their production, the possible tightening of supplies could prompt feed millers to return to the market.

Corn market stayed strong as a lower domestic harvest was expected due to the drought in the northeastern production region. However, given China's larger planted acreage, the harvest may not drop by a big margin and will not significantly dent the supplies. Currently, the Chinese government holds stocks of more than 30 million tonnes and has been releasing them through the weekly state reserves auction.

The wheat market remained bullish amid better demand. Prices are likely to continue rising in the coming two or three weeks.