December 27, 2007

China soy futures hit record on robust demand

China's Dalian soy and soyoil futures rose to record highs on Wednesday, spurred by high demand ahead of the New Year holidays, traders said.

Spot prices are also at record highs, reflecting inflation in food prices.

The most-active soyoil contract, May 2008, rose RMB282 (US$38.5) or 2.8 percent to RMB10,228 (US$1,397) per tonne.

Liu Defeng, an analyst with CIFCO Futures in Dalian, said demand picked up strongly before the New Year holidays.

Soyoil prices increased as much as 5 percent, specifically in the northeastern province of Heilongjiang, the country's largest soy producer, where a reduced domestic harvest has led to shortages.

Traders expect soyoil prices to continue its climb next month, supported by Chicago Board of Trade futures. CBOT soy prices hit multi-year highs before Christmas.

Meanwhile, large imports of soy in December and January would continue to push domestic meal prices, traders said.

China purchased about 3.1 million tonnes of soy offshore in December and a similar amount is expected to arrive in January.