February 11, 2009

Soybean prices are likely to rise over the next few days on Chinese demand and dry weather in Brazil and Argentina.

 

According to Tim Hannagan, analyst with U.S.-based commodities brokerage Alaron, China bought 120,000 metric tonnes of U.S. soybeans Monday.

 

He added that U.S. traders are closely watching China's buying patterns, and it seems that in the near term, China could continue buying soybeans from South America and the U.S.

 

In previous years, China would slow buying U.S. soybeans in early January and switch to buying South American soybeans from late February. But dry weather concerns in Brazil and Argentina have kept China actively buying U.S. soybeans throughout the year so far.

 

There are also dry weather concerns for China's wheat crop.

 

Chinese officials have said the wheat crop will be under serious threat if sufficient rains don't come in the next 15 days.

 

However, these officials are confident that irrigation and drought-relief efforts will limit any fall in wheat output.

 

So far, international wheat prices haven't really responded bullishly to the Chinese drought concerns, as the world remains amply supplied with wheat.

 

In other wheat news, state-run Trading Corp. of Pakistan rejected a lone offer of 50,000 tonnes from Cargill in its 250,000-tonne U.S. wheat import tender.

 

According to a trader in Karachi, international trading firms stayed away from the tender, as they didn't find the bid terms attractive.

 

TCP may announce a fresh wheat import tender later this week.

 

Traders said the new tender may be the last TCP floats until November or December this year, as the country prepares to harvest an expected bumper crop from late February.