October 23, 2006

 

China's soybean prices stable amid mixed sentiment

 

 

Soybean prices in China's major producing regions held firm in the week to Friday (Oct 20), amid mixed market sentiment.

 

In Heilongjiang, China's largest soybean producing province, prices of average quality soybeans were relatively stable in its two main soybean trading centres.

 

In Harbin, the provincial capital, prices were quoted around RMB2,300 a tonne, almost the same as last week, while prices in the north-eastern part of the province were unchanged at RMB2,200/tonne.

 

Prices were quoted around RMB2,350-2,380/tonne in Jilin province, another major soybean producing area in China's north-east, little changed from a week earlier.

 

"The recent gains on the CBOT and firm soy futures prices on the Dalian Commodity Exchange lent strength to spot prices," said Zhang Liwei, an analyst at the China National Grain and Oils Information Centre, a major government-backed think tank.

 

However, "the borrowed support from futures was offset by rising supply to some extent," Zhang added.

 

"Farmers rush to sell newly harvested soybeans to take advantage of the current prices which they think are good," he said.

 

Imported soybeans have had a substantial impact on the prices of Chinese soybeans, analysts said.

 

COFCO Futures Company said soybean import arrivals were around 370,000 tonnes Oct 1-10, with total arrivals forecasted at 2 million tonnes for the whole month.

 

China National Cereals, Oils and Foodstuffs Corp, China's largest grain trader, holds a controlling stake in COFCO Futures.

 

China imported 1.79 million tonnes in September, according to customs data.

 

Imports will continue to rise in the coming months, with demand for soyoil and feed increasing.

 

"Consumption of edible oils and meat usually jumps in the fourth quarter," Tu Xuan, an analyst at Shanghai JC Intelligence Co, said.

 

"Import arrivals will probably rise to around 2.4 million tonnes in November," she added.

 

CBOT's performance will have a major impact on domestic soybean prices over the next couple of months, analysts said.

 

"Where spot prices will be headed depends on the prices of imported soybeans, which will be subject to CBOT's performance," Zhang said.

 

Imported soybean prices were quoted around RMB2,500-2,550/tonne this week, up around RMB20-40 from last week, according to local traders.