October 21, 2010

US soy advances to 16-month high on rising China purchases

US soy climbed to the highest price in more than 16 months on speculation that China, the world's largest importer, may boost overseas purchases to increase domestic supplies and cool inflation.

Soy for January delivery increased as much as 0.9% to US$12.35 a bushel, the highest price for the most-active contract on CBOT since June 5, 2009. They traded at US$12.285 a bushel.

US exporters sold 180,000 tonnes of soy to China, the USDA said yesterday. That adds to the 12.4 million tonnes in outstanding sales by US exporters reported by the USDA as of October 7.

"The Chinese are buying US soy to sell into the domestic market where prices are higher," said an analyst. "We would expect the voracious demand from China to last as long as US supplies are cheaper", he said.

May-delivery soy in Dalian rose as much as 2.3% to CNY4,341 (US$653) a metric tonne, the highest price for the most-active contract since September 1, 2008. US soy for January delivery is 69% of the value of that contract.

Food costs and residential costs led the 3.6% increase in China's September consumer prices, said Sheng Laiyu, spokesman for the National Bureau of Statistics. Food prices climbed 8% in September from a year ago.

Imports of soy may total 4.65 million tonnes this month, the China National Grain & Oils Information Center said. The volume will be almost the same as in September and higher than the 4.16 million tonnes estimated by the Ministry of Commerce.

Corn for December delivery climbed as much as 1.1% to US$5.795 a bushel before trading at US$5.73 in CBOT. Wheat for December delivery was little changed at US$6.8175 a bushel, after rising as much as 1.4 % earlier.