August 25, 2008


China soy market to improve on strong holiday demand

China's soy oil and soymeal markets should improve soon after commodities prices increase in participation of strong holiday demand next month, according to the China National Grain and Oils Information Centre (CNGOIC) on Friday (August 22, 2008).


The CNGOIC said soy oil demand has picked up ahead of the Mid-Autumn festival in September and National Day holiday in early October, which drove prices up by more than 10 percent last week.


Prices could still increase due to the higher cost of imported soy but ample stocks would slow the pace, CNGOIC said.


Soymeal prices also increase as feed mills built inventories and pushed up prices, with demand estimated to be stable in the coming weeks.


Soy outlook is bearish as crushers were running at a lower capacity on negative crushing margins, while high supplies at ports would also affect soy demand.


In addition, the corn market remained bearish after local governments in the northeast released another 350,000 tonnes of corn reserves into the market with the aim to stabilise prices and clear stocks to make room for the new harvest. Corn processors in other areas had also reduced their purchase operations as they wait for the new harvest.


Meanwhile, flat flour sales kept wheat demand low and wheat prices are likely to remain stable or move upwards in September.

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