October 31, 2011

China's soy prices remain steady, trade slow

The prices of soy in the main producing areas of China were mostly unchanging in the week to Friday (Oct 28), while trade was slow as farmers were hesitant to sell at low prices.

Prices in Heilongjiang, the top soy producing area that accounts for more than 40% of China's total output, were between RMB4,040 (US$636.01) and RMB4,120 (US$648.60) a tonne, unchanged from a week earlier.

Prices were around 8% higher from the same period last year, but farmers view the increase as insufficient to offset rises in costs, analysts said.

Farmers are waiting for cues from the central government on whether it will significantly increase purchase prices for its soy reserves.

Last year the price was set at RMB3,800/tonne (US$598.23).

Crushers are also cautious on buying as profit margins are still negative due to low soyoil and soymeal prices, which closely track the CBOT counterparts, traders said.

The soymeal price outlook remains uncertain as a record harvest of corn and declining profits for hog raisers will curb demand.

Traders and feed mills are maintaining low inventories of soymeal, signalling downside risks still exist, the state-backed China National Grain & Oils Information Center said in a research note.

Pork prices, a leading contributor to consumer-price inflationary pressures, fell 1.8% in the week to Sunday, marking the fifth consecutive week of declines and the biggest weekly fall in 19 months, Ministry of Commerce data showed.