November 17, 2008

China's soy and soy oil markets were expected to remain strong in the week ahead, although the outlook for soy oil weakened as supplies grew, while corn remained bearish on weak demand, according to a survey by an official think-tank.

China's imports of soybeans remained robust even after the slide of domestic soy prices, but the price drop left domestic prices higher than imports, according to the survey by the official China National Grain and Oils Information Centre (CNGOIC).

Soy oil supplies increased after crushers raised their output, easing tight supplies in some areas. Physical prices stayed firm, although trading was thin, said the centre.

"Soy oil prices are unlikely to keep to an upward trend and demand is not likely to improve significantly in coming weeks," it said.

The outlook for soymeal stayed weak and demand from feed mills has declined. The start-up of some crushing operations in costal areas has also increased supplies.

The corn market remained sluggish as processors, hit by weak exports, delayed making purchases. Government purchases of the grain were likely to halt price declines in the northeast, while prices in the north were expected to stay weak for a long time.

The wheat market weakened due to sluggish flour sales.