July 26, 2011


China's soy, edible oil futures prices slump


Farm produce futures on Dalian and Zhengzhou commodity exchanges ended mixed Monday (Jul 25) with soy and vegetable oils slumping while sugar and grain surging sharply.


The January sugar contract on the Zhengzhou Commodity Exchange continued to rise and ended 1.46% higher at RMB7,445 (US$1,155)/tonne following a sharp rise on the spot market. Sugar prices are still in the upward trend with booming demand in summer, analysts say.


The China Sugar Association predicted that the domestic sugar market will see short supply of two million tonnes in crushing season of 2010-11 and a large amount of imports are needed to meet the demand. However, as international sugar prices are rising, the import cost starts to increase and this also helps to support domestic sugar market.


Grain futures soared just before the close of Monday. The January early rice contract jumped 2.44% to end at RMB2,608 (US$405)/tonne while the wheat contract for January delivery ended 0.8% higher at RMB2,770 (US$430)/tonne.


China had reaped early rice on more than 3.13 million hectares of cropland, accounting for 53.5% of the total, the Ministry of Agriculture said. As the early rice planting area maintains stable while the average yield rises significantly this year, the major producing areas are expected to achieve output increase, the ministry added.


The bellwether May soy contract traded on the Dalian Commodity Exchange ended 1.05% lower at RMB4,611 (US$715)/tonne while the May soyoil contract dived 1.58% to RMB10,194 (US$1,582)/tonne after speculation that China is mulling over cutting value added tax levied on some enterprises engaging in processing of agricultural products including vegetable oil to reduce their tax burden.

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