February 5, 2007

 

Asia Grain Outlook on Monday: Soybeans may rise; US acres may fall

 

 

Premiums for soybeans delivered to Asia may rise in the week ahead, as U.S. futures will likely remain supported by expectations of a sharp reduction in acres planted to soybeans in the U.S. this year.

 

Last week, Pro Farmer, an agricultural newsletter in the U.S., released a survey saying U.S. corn acres in 2007 may increase by 10.9 million-to-11.8 million acres while soybean acres may decrease by 8.6 million-to-9.4 million acres.

 

Farmers are expected to plant more corn in part because of increased interest in ethanol production.

 

Corn futures, however, are unlikely to fall much because of this survey, as market participants on the Chicago Board of Trade continue to be bullish on the commodity.

 

Premiums for soybeans delivered to China from South America are presently around 155-165 U.S. cents a bushel to the CBOT May soybean contract. These soybeans are for shipment in April.

 

Traders in China, the world's largest soybean importer, bought three-to-five cargoes of soybeans over the past week, mainly from South America, said Chinese commodities analysis firm JCI Shanghai.

 

Analysts added that China's soymeal suppliers are stepping up on their soybean purchases, partly because they don't expect much of a fall in imported soybean prices over the next few months and also because they have insufficient stocks at crushing plants.

 

At present, soybean stocks at main Chinese ports total around 1.8 million-to-1.9 million metric tonnes, said JCI.

 

In China's local markets, soybean prices are on the rise, as recent snowfall in northeastern parts of the country hampered deliveries, tightening market supply.

 

A general uptrend in edible soybean prices in the run-up to the Chinese Spring Festival later this month, as well as rising imported soybean prices, are also pushing up domestic soybean prices, analysts said.

 

In other news from China, the government sold 391,830 tonnes of wheat in six provinces in an auction last Thursday, or around 55% of the 711,000 tonnes it had planned to sell. Prices ranged from RMB1,400/tonne to RMB1,630/tonne. The sale is part of a series of auctions over the past few months aimed at stabilizing wheat prices in the country.

 

In deals last week, Taiwan's Members Feed Industry Group, or MFIG, bought 60,000 tonnes of U.S. corn from trading house Cargill in a tender.

 

While 44,965 tonnes will be supplied at a premium of 149.3 U.S. cents a bushel to the CBOT May contract, the remaining quantity will be sold at a flat rate of US$221.50/tonne.

 

Also last week, Taiwan Sugar Corp. bought 23,000 tonnes of corn and 12,000 tonnes of soybeans, both of U.S. origin, from trading house Marubeni in a tender. Marubeni will supply the corn at US$239.08/tonne and the soybeans at US$339.56/tonne.