China's soyabean traders expect the market to stay bearish in the coming week due to tepid demand, while Beijing's increase of minimum purchase prices for grains have turned grain market bullish, according to an official survey.
Sluggish demand for soyaoil and soyameal have forced crushers to refrain from making purchases, and demand for soyabeans was expected to remain flat, the China National Grain and Oils Information Centre (CNGOIC) said.
Crushers were waiting in anticipation of lower prices resulting from ample supplies following the soya harvest in South America, it said. But traders told Reuters this week that Argentina's farmer strike has triggered a force majeure in soya and soyaoil shipments to China, and up to 1 million tonnes of soyabeans to China have been interrupted.
Sufficient supplies have kept soyaoil demand flat, but demand was likely to pick up in coming weeks, spurred by a rebound of both futures and physical prices, it said. The outlook for meal ticked up for the first time in four weeks. The breeding industry was recovering, and fish farming can start up quickly. Meal demand was expected to increase gradually in coming weeks.
Grain markets stayed strong after Beijing raised minimum purchase prices for rice and wheat. The government was also buying corn for reserves in the northeast, supporting prices, it said. Beijing raised the prices for rice and wheat that it paid to farmers for the second time this year, because it is concerned that high production costs will cause farmers to stop growing grains.