September 1, 2008

Soy prices rise as holidays boost China's consumption outlook

Two upcoming holidays in China are lifting soy prices as higher demand is expected in the world's largest soy importer and vegetable oil consumer.

Consumption of vegetable oil will jump in the weeks leading to the mid-autumn festival and the National Day holidays, as bakeries sell oil-rich moon cakes and consumers exchange cooking oil gifts, according to Fu Qiang, a Beijing-based research manager of CGOC Futures Co.

Stronger Chinese soyoil prices are helping boost Chicago futures as speculation on the government's intentions to cut edible oil import tariffs abated, Fu said.

Soy for November delivery gained 0.8 percent to US$13.34 a bushel in after-hour electronic trading on the CBOT. Soy futures have risen 12 percent from a 4-month low set on Aug. 11.

On China's Dalian Commodity Exchange, the contract for January delivery gained 1.3 percent to close at RMB 9,120 (US$1,333) a tonne.

Meanwhile, dry conditions in Heilongjiang, China's biggest grower of soy, have been relieved after recent rains, the China National Grain and Oils Information Centre said.