January 12, 2009
Asia Grain Outlook on Monday: Soybean may rise on weather, China buying
Soybean prices may rise this week due to both weather-related supply concerns and Chinese demand.
Brazil's Ministry of Agriculture has trimmed its estimate for this year's soybean crop to 57.8 million metric tonnes, from last month's projection of 58.8 million tonnes, Barclay's Capital said in a report.
As Argentina and Brazil, two major global soybean exporters, enter the harvest season, continued dry weather could reduce output at a time when global stocks are tight.
This could prolong the bullish spell for soybeans and support other grains such as corn and wheat.
Continued buying if U.S. soybeans by China for its reserves is also supplying bullish impetus.
According to U.S.-based commodities brokerage Alaron analyst Tim Hannagan, China's buyers usually switch slowly from U.S. to South American soybeans starting Jan. 15, but this year expectations of reduced South American output may keep China buying U.S. beans beyond that date.
Hannagan said soybean prices are now critically hinging on South American weather, and depending on which way the weather turns, prices could increase dramatically or fall.
In the near term, he pegs technical resistance for the Chicago Board of Trade's March soybean contract at US$10.90/bushel.
At 0606 GMT Monday, CBOT March soybeans were at US$10.56/bushel, up 20 cents from Friday's pit-trade closing.
