China soyaoil off 25-month high

Soyaoil futures in China ended off 25-month highs hit earlier on Wednesday on news that the government will release vegetable oil reserves next week to rein in the recent run-up in prices. The most-active May 2011 soyaoil contract on the Dalian Commodity Exchange ended up 0.3 percent.
The contract went as high as 9,004 yuan in the morning sessions on future supply concerns stemming from a US government report that cut soy crop forecasts. China's Rapeseed oil futures ended up slightly by 0.8 percent. China is going to release 300,000 tonnes of rapeseed oil from state reserves next week as part of efforts to tame rising vegetable oil prices in the runup to national holiday early next year, according to an official announcement issued on Wednesday.
"Above 9,000 yuan is a ceiling for soyoil as the government will release state reserves to control prices, and vegetable oils buyers may purchase rapeseed instead of soyoil," said an oil analyst in China's major soy producing province, Heilongjiang. Last year, Chinese government released 2 million tonnes of soybeans and an undisclosed amount of soyaoil to temper food prices, according to traders. The spread between cash rapeseed oil and soyaoil in China has narrowed to 300 yuan a tonne from the usual 500 to 600 yuan, the analyst said. Palm oil's discount to soyaoil now stands at 600 to 700 yuan a tonne, which may spur more imports.
Some Chinese traders said the high crush margin of 300-400 yuan for soybeans processed into oil and meal may see soybean imports stay above 4 million tonnes. Customs data on Wednesday showed soybean imports has slipped 2.7 percent to 4.6 million tonnes in September from a month ago as traders shift from South American supplies to the US harvest. China's commerce ministry forecast soyaoil imports to almost halve to 129 tonnes in October from an estimated 222,497 tonnes in September.
Malaysian palm oil futures ended more than one percent in Asian trade hours on expectations of higher exports in the Southeast Asian country. Traded volume stood at 4,891 lots at 25 tonnes each. "What is key is whether there is significant growth in Malaysian palm oil exports when the cargo surveyors report on Friday," said a Malaysian dealer in Kuala Lumpur. The market may fail a retracement target at 2,847 ringgit per tonne, as the uptrend is steady, a Reuters technical analysis showed on Wednesday.