July 18, 2011

Soy futures on the Dalian Commodity Exchange snapped a two-day rally Friday (Jul 15) on a strong dollar, after US Federal Reserve Chairman Ben Bernanke said another round of quantitative easing is not imminent.

The most actively traded May soy contract settled at RMB4,661 (US$721)/tonne, down 0.1%.

Despite high port inventories of imported soy and negative crushing margins, the long-term uptrend is still intact, as the market expects the government to lift price caps on edible oils in August when inflation pressure may ease a bit, analysts said.

Investors are also closely watching US soy crop conditions, as hot and dry weather may hurt crop growth.

Still, soy oversupply and the government's inflation-fighting measures will continue to pressure down prices, experts said.

Currently, port soy inventories stand at a record seven million tonnes, and will likely rise with the arrivals of new cargoes, the state-backed China National Grain & Oils Information Centre (CNGOIC) said Friday.

The CNGOIC expects July soy imports to reach 5.2 million tonnes, the highest monthly imports this year.