March 21, 2011

Soy prices in China's major producing areas fell slightly in the week to Friday (Mar 18) as mounting fears about the earthquake-induced crisis in Japan pushed down global commodities markets.

Prices in Mudanjiang, Heilongjiang province, fell about RMB20 (US$3)/tonne over the week to RMB3,840 (US$585)/tonne, while prices of imported soy in major ports fell about RMB50 (US$7)/tonne to about RMB4,200 (US$640)/tonne.

China's soy market was affected by the decline in global commodities bourses, which nosedived amid panic selling earlier last week due to concerns that Japan, a major grain and oilseed importer and the world's third-largest economy, would reduce imports and slow down the global economic recovery.

In China's largest soy producing province of Heilongjiang, traders drove down bid prices and some crushers stopped purchasing in the unfavourable market environment, the local soybean association said.

However, many agricultural futures markets had started to come off lows by Thursday. Prices are expected to stabilise as the Ministry of Agriculture said earlier that China's soy acreage may fall 11% this year, as high cotton and corn prices are encouraging farmers to plant more of those crops.

Sluggish demand for soyoil and soymeal, the weakness earlier last week in the US futures market and the government's regular soy auctions are weighing on the market, according to the Chinese Grain Network.

"Prices of physical soy will face some downside risks in the near term," it said.

An auction of 20,689 tonnes of soy from Heilongjiang's provincial reserves attracted no bids Friday.