June 20, 2011

 

China's soy prices lift as soymeal demand grows
 

 

Soy prices in China rose slightly in the week to Friday (Jun 17), as demand for soymeal, the major raw material in animal feed, is increasing in line with expanding hog production due to high pork prices.

 

The average price in the top producing province of Heilongjiang, which accounts for about 40% of the country's output, rose about RMB20 (US$3) to around RMB3,820-3,860 (US$590-905)/tonne.

 

Import prices in major ports were about RMB3,950 (US$610)/tonne, flat from a week earlier, due to supply pressure.

 

Chinese hog raisers are rebuilding herds of hogs, as soaring pork prices raise enthusiasm for expansion, the Ministry of Agriculture said Wednesday.

 

Port inventories stood at 6.5 million tonnes, an increase of about 260,000 tonnes from a week earlier, according to Chinese Grain Network, a consultancy owned by the state China Grain Reserves Corp.

 

The rise in port stocks showed crushing demand remained weak, suggesting that traders have overestimated demand for soy and booked more cargoes than needed, analysts said.

 

Hog stocks as of May 31 edged up 0.8% from April, while the number of hogs for sale rose 3.1%, the ministry said, citing a survey of more than 2,000 major hog raising cites. Both hog stocks and the number of hogs available for slaughter in May rose for a third consecutive month, it said.

 

"We expect soymeal demand will continue to recover, as breeders will continue stock replenishing when hog prices are above RMB16 (US$2.47)/kg," analysts said.

 

The average ex-farm hog price rose for a sixth consecutive week to RMB17.62 (US$2.72)/kg as of June 8, according to the National Development and Reform Commission, the country's top economic planner.

 

Pork prices will likely ease a bit in July and August due to seasonally low demand, and rebound in September and afterwards, experts said.

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