November 19, 2007

 

China soy prices up sharply as farmers reluctant to sell

 

 

Soy prices in China rose sharply in the week to Friday (November 16, 2007) as farmers and traders were reluctant to sell in expectations of higher prices.

 

Soy prices in Jiamusi city in Heilongjiang province, a major soy producing region, were between RMB4,160-RMB4,240 a tonne, up sharply from RMB3,920-RMB4,040 a week ago.

 

Soy prices in Jixian county in Heilongjiang province were at RMB4,120-RMB4,200/tonne, up from RMB3,980-RMB4,000/tonne the previous week.

 

The National Development and Reform Commission said earlier this week that China's average soy yield per hectare fell by 20.2 percent this year - the lowest level since 1993 - as production was hit by drought and floods.

 

However, farmer profits per hectare were also the lowest since 2002 on rising raw material costs and lower yield, said the NDRC.

 

The NDRC has required domestic soyoil processing plants to increase output to meet the demand for vegetable oil, after its prices surged recently.

 

Traders expected soy prices to remain high in the near term on strong demand.

 

Soyoil prices set record highs on rising international vegetable oil prices.

 

In Shandong province, prices of fourth-grade soyoil were at RMB9,750-RMB10,220/tonne, sharply up from RMB9,430-RMB9,520/tonne the previous week.

 

In southern Guangdong province, fourth-grade soyoil was around RMB9,650-RMB9,900/tonne, surged from RMB9,200-RMB9,300/tonne a week ago.

 

Strong demand will continue to support soyoil prices, and "domestic soyoil prices are unlikely to fall largely as long as international vegetable oil prices remain at high levels, said China National Grain and Oils Information Center in its weekly note.

 

Soymeal prices surged on higher futures prices at Chicago Board of Trade and Dalian Commodity Exchange.

 

In Jiangsu province, prices of average-protein soymeal were at RMB3,650-RMB3,750/tonne, up from RMB3,520-RMB3,650/tonne a week earlier.

 

In Guangdong province, prices of average-protein soymeal were at RMB3,650-RMB3,750/tonne, compared with RMB3,480-RMB3,570/tonne.

 

But analysts said the demand for soymeal is unlikely to increase significantly in the coming weeks due to the slow recovery of the hog sector.

 

RMB 1.00 = US$0.134707