June 23, 2011

 

Wednesday: China soy futures rebound slightly on weak dollar; sentiment stays weak
 

 

Soy futures on the Dalian Commodity Exchange closed higher Wednesday (Jun 22) for a second consecutive session, tracking gains on the Chicago Board of Trade overnight due to a softer dollar.

 

The benchmark January soy contract settled 0.2% higher at RMB4,419 (US$684)/tonne in very thin trade, with traders staying on the sidelines as supply-demand fundamentals remain bearish despite increased demand for soymeal. July CBOT soy closed 1% higher at 13.4875 a bushel Tuesday.

 

Increased soymeal demand on the back of expanding hog production is currently the main driving force for soy prices, but upside momentum appears limited as government-imposed price caps on soyoil are still in place.

 

However, pork prices are likely to rise further as prices of live hogs have risen much faster than pork, increasing feedmeal demand, the National Development and Reform Commission said Wednesday

 

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

 

Chinese feed companies consumed 35 million tonnes of soymeal last year, up 13% from 2009, according to the MOA's National Feed Work Office. Soymeal is the second most widely-used raw material after corn in animal feed.

 

CBOT soy has rebounded slightly in the last two sessions, but is still in a mild downtrend, although an uncertain weather outlook will likely cap the downside, analysts said.

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