December 22, 2006

 

China soy prices mostly firm
 

 

Soy prices in China's major producing regions held largely stable in the week to Friday, with moderate fluctuations in some regions, as the market was divided over where spot prices will go in the next few weeks, analysts said.

 

In Heilongjiang province, China's largest soybean growing region, prices of average quality soybeans were mostly unchanged in the two main soy trading centres.

 

In Harbin, the provincial capital, prices were quoted around RMB2,480-RMB2,540 a tonne, almost flat from last week, while prices in the northeastern part of the province were also unchanged at RMB2,440-RMB2,480/tonne000.

 

In Jilin, another major soybean producing province, prices fell slightly by around RMB20 to RMB2,600-RMB2,620/ton.

 

"Some trading firms and crushing companies are making large purchases, in anticipation of rises in soybean prices next year," said an analyst from the China National Grain & Oils Information Centre, under the State Grain Administration.

 

However, "some others are not so optimistic, concerned about weakening prices of soymeal and soyoil," the CNGOIC trader added.

 

Prices of average quality soymeal were quoted around RMB2,000-RMB2,120/tonne across the country this week, down RMB100 from last week, while those of soyoil fell by around RMB100 to RMB6,800-RMB7,400/tonne.

 

Nevertheless, domestic prices continued to find support from imported soybeans, which are still substantially more expensive than Chinese soybeans, analysts said.

 

Retail prices of imported soybeans were quoted around RMB2,800/tonne at major Chinese ports this week, up around RMB50 from a week earlier.

 

Import arrivals totaled 1.2 million tonnes from Dec 1-10, and are expected to reach 2.5 million tonnes for the whole month of December, according to COFCO Futures Co.

 

COFCO Futures Co. is a unit of China National Cereals, Oils & Foodstuffs Corp., the country's largest grain trader.

 

Ups and downs in China's soybean prices are expected in the next couple of months, subject to various uncertainties.

 

"Soybean futures prices on the Chicago Board of Trade, which saw frequent fluctuations, will have a significant impact on domestic spot prices," the CNGOIC analyst said.

 

In addition, "whether demand for soymeal and soyoil will rebound before the Spring Festival is still in question," Tu Xuan, an analyst at Shanghai JC Intelligence Co. Ltd.

 

The Spring Festival is China's most important traditional festival, and will take place early next year.

 

Furthermore, "animal diseases, such as bird flu, are casting a shadow on China's feed industry," Tu added.