April 22, 2009

Soy prices are likely to remain well-supported as China shows no signs of slowing down its imports.

 

Grain analyst Tim Hannagan said there has been market talk of China buying 275,000 metric tonnes U.S. soys last Friday, while the U.S. Department of Agriculture further reported the sale of 180,000 tonnes of U.S. soys to China Tuesday.

 

"Nothing suggests China's done building (soy) reserves," said Hannagan, adding the demand outlook for soys remained "not just good, but great near term."

 

Chinese traders are buying more imported soys as the government is buying up much of the local crop to build its domestic reserves.

 

Data released Wednesday by the Chinese government showed soy imports surged 67% on-year to 3.86 million tonnes in March.

 

Analysts added that soy imports in April could touch 3.5 million tonnes, while May imports may even top 4 million tonnes.

 

China's corn exports continued to nosedive, with March exports a mere 7,777 tonnes, down 57% on year, with most of the sales going to Taiwan and North Korea.

 

In other news, the USDA said in a report received Tuesday that Sri Lanka's milled rice production this calendar year is likely to be 2.7 million tonnes compared with 2.2 million tonnes in 2008.

 

The report said most of the production increase is expected to come from expanded rice planting in the country's north, central and eastern regions.

 

The report added that Sri Lanka's wheat imports in 2009 would likely fall to 900,000 tonnes from 932,000 tonnes in 2008.

 

While the report didn't directly cite any reasons for the fall in imports, the Sri Lankan government has this year increased the import duty on wheat, which would make the landed cost of the commodity more expensive.