China's Soyoil Supply Tightens Ahead of Holidays - Survey

Beijing - Chinese demand for soyoil, the country's most popular cooking oil, has picked up ahead of the Lunar New Year holidays, triggering a jump in prices and prompting the government to release state reserves, according to an official survey.
 

"A tightening soyoil supply in some areas, coupled with sharply lower imports in December, led to continuous price rises," the China National Grain and Oils Information Centre (CNGOIC) said in a report.
 

The government is releasing soyoil reserves in those areas in an effort to ease the tightness, but the amounts will depend on how high local prices rise, said the center.

Traders told Reuters that Beijing was releasing about 150,000 tonnes of soyoil reserves while buying the same amount, likely from South America, to refill the reserves. .

A recovery in prices of soyoil and soymeal had prompted Chinese crushers to increase imports from the United States, it said.
 

With domestic soy prices still expensive, Chinese imports were expected to remain at a high level in coming weeks, said the center.
 

The soymeal market remained bullish for a second week as merchants and feed mills were building inventories ahead of week-long holidays, which begin the last week of January.
 

A delay in soy shipments, coupled with strict quarantine inspection of U.S soy cargoes at ports, have led some crushers in the south to run at a lower capacity, which has also resulted in a tightening supply of soymeal, it said.
 

"Soymeal demand was likely to keep increasing in the coming week due to lower stocks," it said.
 

The corn market outlook weakened after the government purchases in the northeast provinces failed to trigger purchases by big processors. Processors were running at low capacities and were not active buyers of corn.
 

The wheat market held steady. The government has increased weekly sales by about 400,000 tonnes, but trading volume was lower since many flour mills were running at a loss due to sluggish sales of flour and weak bran prices.
 

The outlook for the rice market picked up as buyings were strong ahead of Lunar New Year holidays.
 

The centre gave the following index data.
 

A reading below 50.0 indicates participants are bearish, a reading of 50.0 indicates they are neutral and a reading above 50.0 indicates they are bullish.
 

Jan 7 Dec 31 Dec 24
Soybean 52.5 48.8 51.9
Soymeal 54.5 51.0 47.5
Soyoil 57.5 53.3 52.5
Corn 50.7 50.9 50.0
Wheat 51.0 50.8 53.8
Rice 51.9 48.8 47.5