March 17, 2008

 

China soy prices fall as global soy futures tumble

 

 

China's major producing regions report soy prices to dip by around 8 percent in the week to Friday on the decline of soy oil and soymeal prices in both the domestic and global markets, arousing concerns that the big fall in 2004 could be replicated.

 

Trading volume was light although offer prices fell, as traders stayed on the sidelines expecting lower prices.

 

Soy prices in Jiamusi city in the major producing province of Heilongjiang were between RMB4,960 and RMB5,140 a tonne, down from RMB5,300-RMB5,780/tonne a week ago, a fall of around 8 percent.

 

Global and domestic soy and soy products futures prices have been falling heavily recently.

 

Further pressure could come on China's market next week from the coming arrival of South American soybeans.

 

Market participants said farmers were also actively selling to cash in for the preparation of spring planting.

 

Prices of raw materials such as soy seed rose significantly, Heilongjiang Jiusan Oil and Fat Co. said.

 

However, Yu Haifeng, an analyst at Tianqi Futures, expected domestic soy prices to consolidate at current levels in the coming week.

 

Soy futures prices recovered slightly Friday on both the Chicago Board of Trade and the Dalian Commodity Exchange, after falling earlier in the week, leaving the market confused about the near-term trend.

 

Soy oil prices fell on concerns about the government's release of soy oil into the market to curb surging prices.

 

First-grade soy oil in Rizhao city in Shandong province was between RMB13,800 and RMB14,500/tonne, down sharply from RMB15,000-RMB16,300/tonne a week ago.

 

First-grade soy oil in Dongwan city in Guangdong province was between RMB14,300 and RMB15,000/tonne, down from RMB15,500-RMB16,300/tonne a week earlier.

 

The government has been releasing soy oil to the market and will increase the supply if soy oil prices stay high, Assistant Commerce Minister Huang Hai said over the weekend.

 

The country's economic planner also urged local soy oil processing plants to increase the production.

 

Market participants' forecasts for soy oil prices in near term are mixed following the recent surge and the subsequent tumble, the China National Grain and Oils Information Center said.

 

Soymeal prices were lower on falling soymeal futures prices at the Chicago Board of Trade and the Dalian Commodity Exchange.

 

Soymeal prices in Rizhao were between RMB3,800 and RMB3,850/tonne, down from RMB3,950-RMB4,060/tonne in the previous week.

 

Soymeal prices in Dongwan were between RMB3,750 and RMB3,850/tonne, down from RMB3,920-RMB3,980/tonne.

 

Soymeal prices are likely to consolidate at current levels due to a lack of supporting news, said Jiusan Oil and Fat Co.

 

US$1 = RMB7.09 as of March 17, 2008