December 3, 2007

Chinese traders: soy weaker on government sales

Chinese traders' expectations on soy and grains weakened after Beijing stepped up efforts to cap food prices.

China bought at least 2.7 million tonnes of US soy early this month, majority of which would be used for state reserves, according to the China National Grain and Oils Information Centre (CNGOIC).

Soy supplies were ample on estimated arrivals of about 3 million tonnes imports in November and December.

Traders' outlook for the soy market was less optimistic as the government resorts to more measures to limit increases in the price of cooking oils. Soyoil supplies have climbed, while demand has fallen.

Meanwhile, the corn market remained bullish, although it is now weaker than last week, as Beijing planned to release more corn from reserves.

The market expected prices to stay strong as corn processors in the north-east continued to raise purchase prices.

Prices in the south are also estimated to stay high due to higher transport costs and a smaller volume being transported by railway from the north-east.

Wheat prices dropped this week after Beijing increased sales from reserves to 2.5 million tonnes, the highest amount among its previous sales.