August 8, 2011


Higher edible oil prices buoy China's soy market


Soy prices in China gained slightly in the week to Friday (Aug 5), propped by an increase in edible oil prices.


Prices in Heilongjiang province, the top producer which accounts for about 40% of China's output, were mostly stable at RMB3,840-3,880 (US$596-602)/tonne. Import prices at major ports rose RMB30 (US$4.66) to about RMB4,150 (US$644)/tonne.


Singapore-based Wilmar International Ltd, which operates in China as the Yihai Kerry Group and enjoys more than 50% market share in China's retail market, has raised the prices of some products by around 5%.


The price rise will enable crusher profit margins to turn positive and lead to a pick-up in demand for soy as the high-consumption season approaches, analysts said.


Retail prices of soyoil and rapeseed oil have risen only 4% each so far this year, the Ministry of Commerce said, compared with a 37% rise in pork and a 15% increase in sugar since these products are not subject to price controls.


Ex-factory prices of soy in the week rose around 2%, while rapeseed oil rose 7% since the government suspended edible oil auctions in early June.


Heavy rainfall in Heilongjiang will likely affect soy crop growth in the crucial growing season in August.


China is expected to produce 14 million tonnes of soy this year, the state-backed China National Grain and Oil Information Centre said, but market participants expect it to be lower.

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