China demand helps soyabeans hit high

Soyabeans jumped into the spotlight for commodity investors this week with prices reaching their highest levels of the year amid voracious demand from China, production problems in Argentina and rapidly declining global stocks.

CBOT May soyabeans rose 5.3 per cent to $10.60 a bushel this week after reaching a six-month high of $10.73 during Friday's session

Dealers note that open interest (active positions) has risen strongly as capital flows into the market in anticipation of further price gains. China, the world's largest importer, is likely to extend a government buying programme for domestically produced soyabeans for two months from April as it remains about 1m tonnes short of its 6m-tonne target.

Chinese traders have been active in both the Brazilian and US markets this week as imported soyabean costs remain lower than the government's buying price for domestic soyabeans.

In Argentina, the soyabean crop is forecast to fall almost 20 per cent this year owing to drought and pests, raising pressure on US supplies. US stocks are expected to fall below 1m bushels by the end of the current crop year and some traders see further price increases as inevitable to ration demand.

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