September 17, 2007

China soy prices make further gains as holidays near

Chinese traders expect the soy and grain markets to stay bullish next week as the approach of the one-week national day holiday early next month spurs demand, a survey by Chna's official grain think-tank indicated.

Prices for October shipment arriving in China were calculated at RMB 4,100 (US$545.4) per tonne, up 9 percent from last week, the China National Grain and Oils Information Centre (CNGOIC) said in a report.

Rising soymeal prices and a rebound in soyoil prices have offered high crushing margins for soy plants, which would run at a higher capacity, stoking demand for domestic soy in coming weeks, the centre said.

However, the outlook for the soy and soymeal market is expected to weaken past the holidays as crushers and feedmills have eased back on purchases amid high prices, the centre said.

Soy crushers were reluctant to book cargoes from the US and South America due to high prices, despite growing demand.

Soymeal prices, at three-year highs, had also dampened demand from feed mills.

More chickens and pigs were slaughtered ahead of the October holidays meaning that a lower population of animals could further dampen meal demand later.

Meanwhile, corn prices had remained high due to bad weather in the corn-producing regions in the northeast. This was worsened by a transport bottleneck which had pushed up corn prices at ports in the south.

The delay resulted as more ships were diverted to ship steel and coal, the centre said.