July 12, 2011

Monday: China soy futures gain, market awaits USDA data

Soy futures on the Dalian Commodity Exchange ended higher Monday (Jul 11), led by soyoil, but trade was thin as buyers stayed on the sidelines ahead of a USDA report.

The most actively traded May soy contract settled 0.3% higher at RMB4,594 (US$710)/tonne. July CBOT soy closed 0.5% higher at US$13.52 a bushel Friday.

The USDA is scheduled to release its latest forecast on supply and demand for global crops, with the market expecting it to revise downward estimates on soy acreage in the US, the world's largest grower.

Meanwhile, a move by a Chinese producer to raise prices is boosting sentiment for edible oils, which has been weak due to government price caps.

Shandong-based Luhua Group, a major peanut oil maker, has hiked product prices by 5% to offset input costs, local media reported.

Nevertheless, customs figures over the weekend showed that China's soy imports in June fell 31% on-year to 4.3 million tonnes, down 6% from May and far below the Ministry of Commerce's forecast of June soy imports at 5.4 million tonnes, reflecting slowing demand in China, the world's largest soy importer.

Meanwhile port soy stocks, which have topped 7 million tonnes, also hurt price sentiment. Stocks will likely rise further, as crushers consumed less soy in June than they imported, the state-controlled China National Grain & Oils Information Centre (CNGOIC) said.

"In the next few months, China's soy demand is expected to be further depressed," the CNGOIC said. "The weak demand may affect international soy prices."