January 29, 2007

 

Asia Grain Outlook on Monday: Soybean premiums may fall on CBOT weakness

 

 

Premiums for soybeans delivered to Asia may fall in the week ahead, as Chicago Board of Trade soybean futures remain pressured by weak U.S. soybean exports and good weather for developing South American crop.

 

Over the past three sessions, soybean futures on CBOT have ended lower.

 

Corn and wheat premiums may turn either way, however, depending on how the demand situation for corn develops. Wheat futures seem to be largely following corn at the moment.

 

In Asia, commodities analysis firm JCI Shanghai analysts said Chinese crushers have gradually switched their soybean buys to South America away from the U.S., as the U.S. soybean supply declines while soybeans from South America's new crop may soon come into the market.

 

China's fresh soybean imports in this week are around six to eight cargoes, with two to three cargoes from the U.S. and four to five cargoes from South America, added JCI analysts.

 

The premium for U.S. soybeans delivered to China is around 172-178 U.S. cents a bushel to the CBOT March contract, for shipment in February and March.

 

Premium for South American soybean is 144-149 U.S. cents/bushel to the CBOT May contract, for shipment in April and May.

 

JCI said that based on CBOT soybean futures prices and world ocean freight costs as of Jan. 25, the price of U.S. soybean in China is around RMB3,050 a metric tonne while it is RMB2,990/tonne for South American soybeans.

 

In other news, Indian traders said the federal government's decision last Thursday to abolish the customs duty on corn is unlikely to result in significant purchases from overseas in the near term, but may give a boost to imports by May.

 

Traders said that while locally produced corn is being delivered at factories at prices around INR8,600/tonne, imported corn will cost close to INR10,500/tonne.

 

They added that corn imports will likely get a boost around June this year when local supplies dwindle and Indian corn prices begin to firm up further.

 

Local corn supplies in India are lean between May and September as the bulk of the harvest takes place in October.

 

The federal government removed the import duty on corn with immediate effect until Dec. 31, 2007 to keep a check on prices and control inflation, a government statement said.

 

Before the latest duty cut, India annually allowed imports of 400,000 tonnes of corn at a concessional rate of 15% customs duty.