February 15, 2006

 

Asia Soybean Outlook: Premiums may rise on freight, futures

 

 

Premiums of soybeans delivered to Asia are likely to inch up in the week ahead on rising dry-bulk ocean freight rates and a drop in soy futures traded on the Chicago Board of Trade, trade participants said Wednesday.

 

Panamax-size cargoes were offered at US$35--US$36 a metric tonne on the benchmark route from the U.S. Gulf to Japan Wednesday, up from last week's US$34/tonne, traders said.

 

Freight rates are expected to continue rising in anticipation of a pickup in Chinese iron ore imports after the Lunar New Year holiday.

 

Freight rates are also expected to climb as Brazil prepares to start shipping its new crop with the harvest season in full swing this month.

 

However, demand for raw materials from Chinese soybean crushers has been weak due to an oversupply at home, traders said.

 

Soymeal consumption is also usually at a low following the Chinese New Year break.

 

Still, China is the world's largest soybean buyer and is expected to resume buying soon, especially when the new South American crop hits the market.

 

In Japan, soybean crushers are buying for March to April shipment.

 

U.S. soybeans shipped out of the U.S. Gulf were offered at 148 cents per bushel over the CBOT May contract, C&F to Japan for an April shipment.

 

In the futures market, CBOT soybean and soymeal futures ended lower Tuesday on light rain forecasts for Brazil's Rio Grande do Sul this week and speculation the U.S. Department of Agriculture at its Outlook Conference Friday will forecast 2006-07 U.S. soy end stocks at possibly more than 600 million bushels.

 

CBOT May soybeans closed down 1 3/4 cents at US$5.96, while CBOT May soymeal ended down 30 cents at US$184.30 per short tonne.

 

In South Korea, buyers are waiting to see how Chicago soy futures perform this week before deciding on their purchases.

 

"Korean buyers have already bought what they need for March and April, and now, they are buying for June arrivals, so they can buy anytime they want," said a Seoul-based grains trader.

 

The Seoul-based Korea Feed Association decided not to buy 165,000 tonnes of optional-origin soymeal in a tender last week as offers were too high, a KFA official said. A re-tender is expected next week.

 

Meanwhile, Taiwan's Breakfast Soybean Procurement Association in Kaohsiung will conclude a tender Wednesday for up to 60,000 tonnes of U.S. or Brazilian soybeans, said a Taipei-based trader.

 

BSPA Kaohsiung will buy one cargo of 40,000-60,000 tonnes of soybeans, to be shipped either March 16-April 3 from the U.S. Gulf or Brazil, or between March 31-April 18 from the Pacific Northwest, the trader said.