September 8, 2003
China Cash Soybean Market Quiet In Past Week; New Crop Eyed
Domestic Chinese soybean prices were confined in a narrow range in the week to Friday, struggling to find direction amid a dearth of fresh news, Chinese traders and analysts said.
But a lowering of estimates for the domestic crop this year has fueled expectations of a pre-harvest rally, said participants.
In the past week, however, soybean prices have mostly remained flat compared with a week ago, traders said.
As of Friday, the prices of locally produced soybeans in northern and eastern China were stuck between 2,600-2,680 yuan ($1=CNY8.28) a metric ton, unchanged on week.
"There is not much fresh news to chew on this week. Most people are just wondering what the soybean crop size will be this fall. If the production proves to be as low as current industry forecasts, the prices of new crop soybeans are likely to jump," a trader from a local soybean trading company in Harbin said.
China's soybean production in 2003 is forecast at 16.50 million to 16.70 million tons, little changed compared with the 16.51 million tons harvested in the fall of 2002, traders said.
But the latest estimates are slightly lower than estimates of 16.60 million to 17.00 million tons one month ago, as unfavorable weather during most of the growing period has trimmed yield potential.
The prices of imported soybeans also remained flat in the past week, quoted around CNY2,640/ton at Chinese ports.
New Crop Size Likely Lower
But in the coming weeks, the soybean market will be preoccupied with the domestic crop size and the logistic situation.
In 2002, tight availability of railcars limited the movement of soybeans to other provinces from the northeastern growing region, local traders said.
"The imbalance of supply among different regions means that even in the harvest season, some crushers still might have difficulty finding ample supplies. The surge in crushing capacity this year is likely to aggravate this situation as more crushers and processors would scramble for new crop supplies in northeastern China," said a third trader from a local brokerage house in Dalian, northern Liaoning province.
In the marketing year from October 2003 to September 2004, China's soybean crushing industry is forecast to grow over 10% to 27 million tons, compared with about 24 million tons in 2002-03.