January 18, 2006

 

 

Asia Soybean Outlook: Premiums to fall on US futures

 

 

Premiums for soybeans delivered to Asia may fall in the week ahead on bearish U.S. futures.

 

U.S. soybean futures fell for most of the week to Tuesday, largely because of good weather conditions for the South American soybean crop and the sluggish pace of U.S. soybean exports.

 

"U.S. soybean futures are looking quite bearish and may fall more this week," said a trader at a Singapore-based trading house.

 

Meantime, China's soybean demand is off to a good start in 2006. With fears of bird flu receding, China has returned to its normal pace of buying soybeans overseas.

 

According to an analyst in Shanghai, China may have bought around 900,000 metric tonnes of soybeans in the first week of January. The analyst said total imports of soybeans in January could total around 1.6 million tonnes.

 

Imports in February could be around 1.5 million-1.6 million tonnes, added the analyst.

 

Imports may sharply rise in March, once the South American crop appears on the market.

 

A U.S. analyst added that China is currently buying enough soybeans to meet immediate needs, as well as hedging against any possible crop failure in Brazil and Argentina.

 

But once the South American crop, generally cheaper than U.S. soybeans, hits the market, China will start building its stocks.

 

In local Chinese markets, soymeal prices are falling as large numbers of poultry are being slaughtered for processing before the Chinese New Year, which falls on Jan. 29 this year. Soymeal is mostly used as poultry feed.

 

Besides, many Chinese farmers are holding on to their soybean stocks, anticipating better prices. Analysts say that if farmers start releasing their stocks, prices of soybeans and soymeal could fall.

 

In other news, a major commodities trading firm Bunge Ltd. last week announced an agreement to buy a soybean crushing and refining plant in the port city of Nanjing, China.

 

The plant, which would be Bunge's second in China, will link the company directly to customers in the expanding soybean and soymeal markets in Jiangsu and Anhui provinces.

 

Meantime, in other Asian countries, soybean and soymeal imports have been quite tepid over the past seven days.

 

South Korea had no major soybean or soymeal import deals over the past seven days, while Taiwan recorded just one deal.

 

Taiwan Sugar Corp. bought 15,000 tonnes of U.S.-origin soybeans from trading house Cargill Tuesday.

 

"Traders in South Korea are waiting for soybean and soymeal prices to come down further before they enter the market," said a trader in Seoul.

 

The trader added that South Korean traders may return to the market only after the Lunar New Year holiday season.

 

Meantime, data released by the Thai government showed the country's January-November 2005 imports of soybeans rose 8% on year to 1.31 million tonnes.

 

Soymeal imports by Thailand reached 1.7 million tonnes in January-November 2005 compared with 1.19 million tonnes in the same period last year.

 

The government didn't provide explanations for the change in imports.