October 14, 2010
China's soyoil futures gain slows on reserve sale plans
Soyoil futures in China ended off 25-month highs hit earlier on Wednesday (Oct 6) on news that the government will release vegetable oil reserves next week to rein in the recent run-up in prices.
The most-active May 2011 soyoil contract on the Dalian Commodity Exchange ended up 0.3%. The contract went as high as RMB9,004 (US$1,352) on future supply concerns stemming from a US government report that cut soy crop forecasts.
China's rapeseed oil futures ended up slightly by 0.8%.
China is going to release 300,000 tonnes of rapeseed oil from state reserves next week as part of efforts to tame rising vegetable oil prices leading up to national holiday early next year, an official announcement said.
"Above RMB9,000 (US$1,351) is a ceiling for soyoil as the government will release state reserves to control prices, and vegetable oils buyers may purchase rapeseed instead of soyoil," said an oil analyst in China's major soy producing province, Heilongjiang.
Last year, Chinese government released two million tonnes of soy and an undisclosed amount of soyoil to temper food prices, according to traders.
The spread between cash rapeseed oil and soyoil in China has narrowed to RMB300 (US$45) a tonne from the usual RMB500-600 (US$75-90), the analyst said.
Some Chinese traders said the high crush margin of RMB300-400 (US$45-60) for soy processed into oil and meal may see soy imports stay above four million tonnes.
Customs data on Wednesday showed soy imports has slipped 2.7% to 4.6 million tonnes in September from a month ago as traders shift from South American supplies to the US harvest.
China's commerce ministry forecast soyoil imports to almost halve to 129,000 tonnes in October from an estimated 222,497 tonnes in September.
Buyers reported no soyoil cargoes loaded from Argentina in October despite some dealers expecting trade to resume soon after China lifted a ban on shipments from the South American country.
