November 5, 2007

 

China soy prices surge as farmers reluctant to sell

 

 

China's soy prices surged in the week to Friday (November 2), as farmers were reluctant to sell due to an output cut this year.

 

Traders and analysts expect a big reduction in domestic soy output this autumn because of an earlier severe drought in major producing regions.

 

Soy prices in Jiamusi city in Heilongjiang province, the major soy producing region, were between RMB3,880 to RMB4,000 a tonne, sharply up from around RMB3,720/tonne a week ago.

 

Soy prices in Qianjin in the province were at RMB3,820 to RMB3,940/tonne, up from around RMB3,680/tonne the previous week.

 

Farmers were increasingly reluctant to sell in expectations of higher prices, despite already higher offers from soyoil processing plants, said Heilongjiang Jiusan Oil and Fat Co.

 

Rising soy prices and tighter monetary policy to tame inflation could put soyoil processing plants under increasing pressure, it added.

 

High imported soy prices and soy futures prices at the Chicago Board of Trade also helped to support domestic soy prices, said analysts.

 

Soyoil prices have surged on record high crude oil prices.

 

In Shandong province, fourth-grade soyoil prices were at RMB9,050 to RMB9,400/tonne, up from RMB8,900 to RMB9,000/tonne the previous week.

 

In southern Guangdong province, fourth-grade soyoil was around RMB8,900 to RMB9,200/tonne, higher than RMB8,750 to RMB8,800/tonne a week ago.

 

In the eastern city of Dalian, fourth-grade soyoil was up at RMB9,200 to RMB9,600/tonne from RMB9,000 to RMB9,100/tonne a week earlier.

 

However, soyoil processing plants and traders are likely to increase sales volume in the near term on high prices, said China National Grain and Oils Information Centre in its weekly report.

 

While high soyoil prices have curbed demand for it, increased volume could help to push soyoil prices lower, it added.

 

Soymeal prices surged on rising soy prices and soymeal futures prices, but the demand for soymeal hasn't picked up significantly, said Heilongjiang Jiusan Oil and Fat Co.

 

In Jiangsu province, prices of average-protein soymeal were at RMB3,470 to RMB3,550/tonne, up from RMB3,420 to RMB3,440/tonne a week earlier.

 

In Guangdong province, prices of average-protein soymeal were at RMB3,400 to RMB3,520/tonne, compared with RMB3,370 to RMB3,430/tonne.