August 22, 2011

Soy prices in China's major producing areas were stable amid flat trading in the week to Friday (Aug 19), as crushers had difficulty acquiring soy despite improving profit margins as farmers have almost sold out their stocks.

Prices in Heilongjiang, the top producing province, were mostly stable at RMB3,840-3,880 (US$601-$607)/tonne. Import prices at major ports were flat at RMB4,150 (US$649)/tonne.

Soy crops are growing well and will likely produce a bumper harvest this year, it said.

Local media reported that the government will sell four million tonnes of soy from state reserves to major edible-oil makers to bolster market supply. Once the government completes the sales, only 1.4 million tonnes of state soy reserves will remain, analysts said.

The government may need to buy from the domestic market to replenish its stockpiles when harvesting is complete around November, and this will support soy prices, analysts said.

The state-backed China National Grain & Oils Information Centre (CNGOIC) earlier this month revised down its forecast for soy output this year to 13.5 million tonnes, a decrease of 11% from 2010. It previously forecast a 7.9% fall in output to 14 million tonnes in July, suggesting China may import more to meet domestic demand.

China's demand will remain high in the marketing year starting September 1, with the USDA estimating imports will rise 8% to 56.5 million tonnes.