August 12, 2011


China sees booming farm produce prices in long term


China's agricultural commodities prices will trend higher in the long run, with bright prospects for edible oils, feeds, and aquatic products given their policy support and weather uncertainty, analysts said.


The China International Capital Corp reported that average selling prices of soymeal started to rise from the end of May has increased by RMB300 (US$47)/tonne, or over 10% so far. Since the beginning of the third quarter, its prices have jumped by about RMB150 (US$23)/tonne or 5%.


The country's soyoil prices on the spot market have also gone up RMB200 (US$31)/tonne or 2% since July.


Meanwhile, major edible oil producers in China have hiked retail prices recently, a move that is expected to improve the industry's profitability and drive up demand for bulk soyoil.


Yihai Kerry Group, which operates as the biggest cooking oil producer in the country, began to raise prices of its Jinlongyu brand on August 1.


Soyoil brands under the flag of major cooking oil producers Yihai Kerry Group, COFCO, and the Sanhe Hopeful Grain and Oil Group raised prices of about 5%, according to reports.


Experts said that edible oil companies were likely to further lift prices once the domestic Consumer Price Index stabilises, in an effort to cover the rise in production costs.


They predicted that soyoil and meal prices will have room to rise in the second half on booming consumption, while China's corn oil industry would accelerate development in the following three years.


Analysts also hold good outlook for aquatic products. Freshwater fish prices have surged by 10% to 25% since the beginning of this year due to drought and the ensuing flood in south China as well as mounting production costs. Seawater produce prices gained moderately.

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