July 4, 2011
Soy prices in China were stable in the week to Friday (Jul 1), with crushers staying on the sidelines due to weak margins and low capacity utilisation.
The average price in the top producing province of Heilongjiang, which accounts for about 40% of the country's output, was flat at RMB3,820-3,860 (US$591-597)/tonne. Import prices in major ports were about RMB3,950 (US$611)/tonne, also flat from a week earlier due to supply pressure.
Crushers' average operating rate in Heilongjiang is less than 50%, a local crusher said.
Soy acreage in the top producer is expected to fall by around 20% this year, losing ground to corn. The reduced acreage will underpin soy prices in the long term, as demand for local non-genetically modified soy is still rising.
China will extend price caps on cooking oil sales until August 15 to keep the market stable ahead of heavy consumption during the Mid-Autumn Festival, local media have reported.
The price controls were imposed around November and previously extended in April as an informal government requirement for major producers including Singapore-based Wilmar International Ltd and domestic companies Cofco Ltd and Chinatex Corp, to support Beijing's efforts to contain inflation.
Wilmar, which accounts for half of China's cooking oil retail market, operates in the country as the Yihai Kerry Group.
Many medium- and small-sized crushers blame losses on the price caps, as they are not allowed to buy cheaper state soy and edible oil reserves.