August 15, 2011

Soy prices in China were stable in the week to Friday (Aug 12), as fundamentals remained unchanged ahead of the country's harvest.

Prices in Heilongjiang, the top-producing province, were mostly stable at RMB3,840-3,880 (US$598-605)/tonne. Import prices at major ports were flat at RMB4,150 (US$647)/tonne.

Trade of locally produced soy was sluggish, as farmers' inventories were almost sold out, but buying of imported soy is on the rise as profit margins for crushers have flipped into positive territory on the back of higher edible oil prices.

However, analysts noted that the margins are still modest.

On Friday the state-backed China National Grain and Oils Information Centre revised its domestic soy forecast for this year to 13.5 million tonnes, down 11% from a year earlier. It had forecast 14 million tonnes in July.

The USDA also revised its production forecast for China, to 14 million tonnes from a previous forecast of 14.3 million tonnes, due to reduced soy growing area.

Supply is still adequate, as port soy inventories were around 6.7 million tonnes as of August 8, equivalent to around 12% of China's annual crushing demand.

Hog inventories as of the end of July rose 1.1% from June, marking the fourth consecutive month of rising stocks, spurred by surging pork prices, the Ministry of Agriculture said.

But hog production returns have shown signs of decline, as hog prices have started falling even as corn prices have climbed, government data showed.