June 27, 2011

 

China soy prices remain stable despite drop in domestic production

 

 

Concerns about a drop in domestic soy output in China due to sharply reduced acreage were offset by an oversupply of imported soy, leading to stable soy prices in the week to Friday (Jun 24).

 

The average price in the top producing province of Heilongjiang, which accounts for about 40% of the country's soy output, was flat at RMB3,820-3,860 (US$590-596) a tonne. Import prices in major ports were about RMB3,950 (US$610) a tonne, also flat from a week earlier due to supply pressure.

 

Port inventories of imported soy stood at a record high of around seven million tonnes, and are expected to rise further as more shipments arrive, the state-owned China National Grain & Oils Information Centre said in its monthly report.

 

The market expects soy acreage in China this year to fall around 30%, losing ground to corn due as prices of the most widely-used raw material in animal feed have risen about 15% so far this year due to strong demand, while soy prices have been stable.

 

Domestic soy output this year may fall 3.2-5 million tonnes from last year's 15 million tonnes, Xinhu Futures Co said in a research report.

 

Prices will likely be stable or stuck in a narrow range as the oversupply will restrain the market for a long time, even though demand for soymeal is recovering on the back of high pork prices and related demand for animal feed, analysts said.

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