November 26, 2008
The Chinese government's move to buy soy in the bid to increase farm incomes may be short-lived due to the economic downturn, and soy prices are expected to drop further.
The price of soy futures contracts were trading at around RMB3,277 a tonne earlier today, (Nov 26), down around 40 percent from a record of RMB5,550 in July, according to the Dalian Commodity Exchange.
Wang Xinggang, an analyst from Zhongzhou Futures said as the economy is slowing, soy prices are expected to dip further. His take was that the impact would be short-lived. However the Chinese government's move would set a floor for prices to ensure that farmers continue to plant, according to Ho Choon Seng, an analyst and China product head at CIMB in Singapore. Still his sentiment was that commodities are determined by global trends and prices.
US$1=RMB6.828 (Nov 25)