November 12, 2010

CBOT soy gains on higher Chinese imports speculation

Soy rose in Chicago on speculation that China, the world's biggest importer, may increase purchases to help cool domestic food prices and on a reduced estimate for US stockpiles.

China's imports may climb 39% from a month earlier to 5.2 million tonnes in November, the China National Grain & Oils Information Centre said Thursday (Nov 11). US inventories before next year's harvest will total five million tonnes, down 30% from an October forecast, according to the USDA.

As of October 28, exporters in the US, the world's largest soy grower and shipper, agreed to sell 17.6 million tonnes to China for shipment from September 1, the USDA said. Food prices gained 10.1% in October, the biggest advance since August 2008, China's statistics bureau said.

China may allow the yuan to appreciate by 5% in the next 12 months, lowering its import costs and slowing inflation by an estimated 0.3%. Consumer prices rose a larger-than-forecast 4.4% from a year earlier, the highest in two years, according to the statistics bureau report.

Soy output in Mato Grosso, Brazil's biggest producing state, will remain at 18.8 million tonnes next year, the first time production will fail to grow since 2007, after dryness delayed planting and prompted farmers to favour cotton, according to the Mato Grosso Soybean Producers Association. The state grows 30% of the nation's soy crop.

Brazil, forecast to supply 32% of global soy exports, was estimated to harvest 67.5 million tonnes in the year that began October 1, according to the USDA. The nation is the world's second-largest grower and shipper.

Many agricultural commodities including corn, soy and wheat are "still cheap" even after recent rallies, an analyst said.

Corn for March delivery gained 3.25 cents, or 0.6%, to US$5.8425 a bushel and has increased 41% this year.

December-delivery wheat added 2.25 cents, or 0.3%, to US$7.1225 a bushel, bringing this year's climb to 32%. Milling wheat for January delivery traded on NYSE Liffe in Paris slipped 0.2% to EUR221.75 (US$304.82) a tonne.