November 24, 2006
China's soy prices surge on rise in soyoil market
Soy prices in China's major producing regions rose sharply in the week to Friday, thanks to a surge in soyoil prices, analysts said.
In Heilongjiang province, China's largest soy growing region, prices of average quality soys rose significantly in the two main soy trading centres.
In Harbin, the provincial capital, prices were quoted around RMB2,580-RMB2,620 a tonne, up RMB160-RMB180 from last week, while prices in the northeastern part of the province were at RMB2,520-RMB2,560/tonne, around RMB150 higher.
In Liaoning, another major soy producing province, prices were quoted around RMB2,600-RMB2,650/tonne, up RMB100-RMB150 from a week earlier.
"Soy prices found solid support from a surge in soyoil prices early this week," said Zhang Liwei, an analyst at the China National Grain & Oils Information Centre under the State Grain Administration.
Soyoil prices were quoted at RMB7,700-RMB8,000/tonne across China this week, up RMB800 on average from last week.
"Crushing companies, seeing profit improving, increased purchases of soys," he added.
"Farmers were reluctant to sell this week, even with prices soaring, probably expecting further gains in soy prices over the next couple of months," Zhang said.
But "some grain traders, concerned about a possible downward correction in the short term, rushed to sell their stocks to take advantage of the current high prices," said Tu Xuan, an analyst at Shanghai JC Intelligence Co.
Soy imports have a substantial impact on domestic prices, analysts said.
"Retail prices of imported soys remained stable at RMB2,780-RMB2,800/tonne this week," Zhang said.
"Import arrivals are expected to reach 2.5 million tonnes this month," he added.
In October, import arrivals totaled 2.01 million tonnes, according to COFCO Futures Co.
But the rise in soy prices is not expected to carry over into next week, analysts said.
"With fundamentals largely unchanged lately, soy prices will probably fluctuate around the current level in the near future," Tu said.
However, "soy prices are showing an uptrend over the long run, with demand expected to rise, supported by a recovery in consumption of pork and poultry," she added.