February 23, 2005

China soymeal prices up on post-festive buying

Soybean meal futures rose as much as 3.6 percent in China as buyers resumed orders after the Spring Festival holidays, and on concern soybean crops in Brazil and Argentina may be damaged by warmer weather.

China is the world's second-largest user of soybean meal, which is processed from soybeans and used to feed livestock. Traders delayed purchases of the meal in the past two weeks, when most businesses were closed for the holiday.

Supply of soymeal may not have caught up with the short- term rise in demand while orders are being placed on expectations of increased demand in spring and summer.

Increased buying in China may extend gains in soybean meal prices, which have jumped 8 percent in the past week. Soymeal for delivery in May rose as high as RMB2,350 and was at RMB2,321 on the Dalian Commodity Exchange at 1.35 pm Beijing time.

China soymeal demand is forecast to rise 15 percent to 21.4 million metric tons this year from 18.6 million tons. The US is the world's largest soymeal user.

In China, activity in grain transportation has picked up after the Spring Festival. Prices are also being buoyed by concern that soybean crops in Brazil will be smaller than expected, traders reveal.

In Chicago, soybean prices rose to a five-month high yesterday on speculation that almost a month of hot, dry weather in Brazil and Argentina will damage crops.

Hotter weather in Brazil's major soybean-growing areas of Rio Grande do Sul, Parana and southern Mato Grosso are damaging plants just as beans are forming in pods, the Meteorlogix weather service said yesterday. In Argentina, more rain is needed to prevent crop losses, it said.