November 1, 2008
China soy rises as government buys to build stocks; trade thin
Soy prices rose in China's biggest producing areas, as the government stepped in to purchase the commodity at rates higher than those prevailing locally.
Prices in Jiamusi city in Heilongjiang province, a major producing area, were around RMB 3,700 per tonne, from RMB 3,360 - RMB 3,520/tonne a week ago. In Suihua, also in the same province, the increase was to the same level from RMB 3,400 - RMB 3,520/tonne the week before.
The government began buying soy in the northeastern and northern areas Oct. 22 at RMB 3,700/tonne to build stocks. It is expected to procure a total of 1.5 million tonnes with an aim to support domestic prices, which have declined on account of a good harvest and large imports.
Speculations that China may raise soy import tariff to as much as 9 percent from 3 percent now also helped to push up prices.
Still, buying interest in local soy was thin, dampened by falling imported prices of the commodity, which are lower than domestic ones.
Soyoil prices were mixed, but were supported by the rise in soy prices.
First-grade soyoil prices in Dongguan in Guangdong province were RMB 6,350 - RMB 6,700/tonne, down from RMB 6,450 - RMB 6,950/tonne a week ago.
First-grade soyoil prices in Rizhao in Shandong province were RMB 6,650 - RMB 7,000/tonne compared with RMB 6,550 - RMB 7,000/tonne a week ago.
Although soyoil demand has picked up in recent weeks, prices haven't risen significantly due to ample domestic supplies and lower global prices, said China National Grain and Oils Information Center in its note issued earlier this week.
Soymeal rose slightly and the rebound in futures market and higher soy prices helped support cash prices.
Prices in Dongguan were RMB 3,050 - RMB 3,150/tonne compared with RMB 3,030 - RMB 3,100/tonne, and RMB 3,200 - RMB 3,400/tonne in Rizhao from RMB 3,150 - RMB 3,300/tonne.
But trading wasn't active as the feedmeal demand remained sluggish while soy traded at CBOT was still consolidating, pressuring domestic prices, said traders.