July 22, 2011

Farm produce futures on Dalian and Zhengzhou commodity exchanges continued the mixed performances on Thursday (Jul 21), with grain and cotton dropping while sugar and edible oil rising moderately.

Some media report said that China's big cooking oil producers including Yihai Kerry Group and state-owned COFCO Group have applied to the National Development and Reform Commission for about 5% price increase. This raised market expectation that the government may relax control on edible oil prices.

However, with a large amount of imports in the first half, domestic edible oil market has not seen obvious supply shortage. Dalian soy and soyoil futures are expected to feel more impact from CBOT in the following period, analysts say.

The bellwether May soy contract traded on the Dalian Commodity Exchange rose 0.24% to end at RMB4,659 (US$723)/tonne while May soyoil contract ended 0.14% higher to RMB10,362 (US$1,607)/tonne.

The January sugar contract on the Zhengzhou Commodity Exchange ended 0.47% higher at RMB7,332 (US$1,137)/tonne. Sugar prices are still in the upward trend with booming demand in summer, analysts say.

Although sugar demand is increasing in summer and supply is slightly tight this year, sugar prices are unlikely to surge in the following months and may hold at above RMB7,000 (US$1,086)/tonne in consideration of ample reserves held by the government as well as an increase in the planting area for crushing season 2011-12, insiders generally believe.