November 10, 2006

 

China soybean prices increase on rising demand

 

 

Soybean prices in China's major producing regions continued to gain in the week to Friday amid a recovery in demand thanks to soaring prices of soyoil and soymeal, analysts said.

 

In Heilongjiang, China's largest soybean producing province, prices of average quality soybeans rose considerably in the two main soybean trading centres.

 

In Harbin, the provincial capital, prices were quoted around RMB2,340-RMB2,360 a tonne, up RMB20 on average from last week, while prices in the north-eastern part of the province were at RMB2,300-RMB2,340/tonne, around RMB20-RMB40 higher from a week earlier.

 

In Jilin, another major soybean growing province in China, prices were quoted around RMB2,380-RMB2,400/tonne, RMB40 higher than last week.

 

"The profitability of crushing companies has improved lately, with prices of soyoil and soymeal rising remarkably over the past three months," said Wang Zhengang, an analyst at the China National Grain & Oils Information Centre.

 

Soyoil prices were quoted at RMB6,700-RMB7,000/tonne across China this week, up around RMB1,000 compared with three weeks earlier, according to Wang.

 

Grain traders and state warehouses are increasingly active in buying soybeans, propelled by recovering demand, Wang added.

 

Soybean imports have a substantial impact on domestic prices, analysts said.

 

"More crushing companies in northern and central China turned to Chinese soybeans as prices of imports climbed to around RMB3,000/tonne this week," said Tu Xuan, an analyst at Shanghai JC Intelligence Co. Ltd.

 

COFCO Futures Co. said soybean import arrivals totaled around 2.01 million tonnes in October, up from 1.47 million tonnes a month earlier.

 

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

 

COFCO Futures said import arrivals will continue to rise in November to around 2.5 million tonnes.

 

But gains in soybean prices may not last, with a downward correction on the Chicago Board of Trade expected soon, according to Wang Zhengang.

 

"The market expects soy futures on CBOT to correct downward next week, which will weigh on China's soybean prices," Wang said.

 

But Tu disagreed with Wang, saying "market sentiment will not be impacted by the expected downward correction on CBOT, as soybean prices are likely to see long-term bullish momentum."

 

"China's soybean prices will at least hold firm and may gain further next week," she added.