September 11, 2009

China's purchases of new US and South American soy for shipment next year should maintain a robust pace in the coming weeks as a smaller harvest could make the domestic crop more expensive than imports, according to an official survey by the China National Grain and Oils Information Centre (CNGOIC).

US soy for January shipment were priced at RMB3,500 (US$512.40) per tonne while the South American crop for May delivery reached RMB3,300 (US$483.12) per tonne, far below Beijing's stockpiling price, the centre said.

It added that the lower domestic harvest would prompt reluctant farmers to sell their crops while the government is likely to continue to stockpile new crops at a favourable price, which would push domestic prices higher.

The soyoil market turned weak as merchants had completed their purchases and stock up their inventories ahead of the upcoming holidays. Meanwhile, crushers were reducing retail prices in supermarkets to promote sales before the holidays.

The low-import cost of soy weighed on soymeal prices but falling crushing margins over the past two weeks have led some plants to cut production, which helped to prevent a sharp fall in soymeal prices.

On the other hand, the corn market remained bullish as prices rose amid tight supplies. Meanwhile, the government has increased the sales of corn at weekly auctions. With more supplies from the government and coupled with next month's new harvest, the rise in corn prices would be limited in the coming weeks.

The outlook for the wheat market was strong as merchants expected a sound demand amid rising prices.