December 23, 2005

 

China soybean prices slightly higher on year-end demand

 

Soybean prices in China's major soybean-producing areas were slightly higher in the week to Friday, due to a rise in soymeal and edible oil demand at the end of the year.

 

In Harbin, the capital city of Heilongjiang province - China's largest soybean-producing region - prices of average quality soybeans were quoted about RMB2,420/tonne, up RMB10-20/tonne from the previous week.

 

Prices in different areas of Heilongjiang province were mostly higher by RMB20-60/tonne from a week earlier.

 

In Jilin province, another soybean production base in China, prices ranged from RMB2,500/tonne to RMB2,560/tonne, about RMB20/tonne higher from the previous week. 

 

Trading in the soybean market also picked up slightly with the rise in prices.

 

With Chinese Lunar New Year only about a month away, demand for soyoil and soymeal would soon peak, as usual.

 

In the past two months, China's poultry and feed industries were hit by a spate of bird flu cases. But the markets have more or less recovered since early this month, as far fewer bird flu cases have been reported.

 

"Because of the low stock level of soybeans with crushers and feed processing enterprises last month, they are buying more to meet the rising demand," said Wang Shiliang, an analyst with Jilin Grains Center.

 

Wang added that grain traders have also speeded up transportation of grains from farms to processors this month, as railways' ability to transport grains would be strained in January, with Chinese Lunar New Year approaching, which also pushes up prices.

 

"However, traders are still very cautious, as possible bird flu cases are still an issue on their minds," Wang said.

 

Meanwhile, sales by farmers are likely to rise in the coming month, as they would need more cash to prepare for Lunar New Year.