October 25, 2008

More China soy crushers prefer cheaper US soy

More Chinese soy crushing plants, especially in the north, are importing cheaper US soy as Beijing's purchase of domestic soy for state reserves have shored up local prices, according to a survey by an official think-tank on Friday (October 24, 2008).

There are more inquiries on imported soy by crushers, but import volume is expected to remain flat due to ample supplies from months of high imports, said the China National Grain and Oils Information Centre (CNGOIC).

The Centre said Beijing has agreed to buy a certain amount of soy for state reserves at prices of RMB 3,700, pushing domestic prices above the cost for imports.

Soyoil trade has picked up due to low prices and more purchases were seen in the market, but traders were still unwilling to build stocks.

Feedmills are building soymeal inventories this week, while crushers have lowered production to support meal prices, the Centre said, adding that there is less room for meal prices to fall further in coming weeks. Feedmills were building inventories, which would maintain meal demand at a normal level.

In addition, the wheat market weakened upon Beijing's announcement on raising the minimum purchase price for next year's crop, but impact from the price increase was expected to hit the market only after next year's Spring Festival. Corn stayed bearish even after the government increased its purchase prices in the northeast, and trade remains sluggish due to weak demand from processors.