February 20, 2008

Asia Grains Outlook on Wednesday: Bullish CBOT may keep soybean price higher

Asian soybean import prices are likely to keep rising for the rest of this week, tracking continued bullishness in Chicago Board of Trade futures.

On Friday, CBOT soybean futures settled at all-time highs, largely buoyed by continued expectations that China will increase soybean and soyoil imports due to an estimated 40% rapeseed crop loss.

Commodities analysis firm Shanghai JCI said in a report that China may increase its soybean purchases in the near term for another reason: to boost state reserves as demand may surge during the Olympic Games this summer in Beijing.

Last week, however, Chinese importers booked 7-9 soybean cargoes, unchanged from the preceding week.

Meanwhile, China's state-run thinktank China National Grain and Oils Information Center has said that the country's total rapeseed output may decline by a mere 200,000 metric tonnes in 2008 - 1.6% off the 12 million tonnes the government said was produced in 2007 - despite extensive damage by recent snow storms, as higher acreage of rapeseed crop could make up for lower yields.

However, a Commonwealth Bank of Australia analyst report said, "The Chinese are only putting the net year-to-year loss (in rapeseed output) at just 0.2 million tonnes. We suspect that estimate is at risk of being revised higher."

In Japan, the Ministry of Agriculture continues to import a large amount of wheat in its weekly tender, unfazed by record-high prices. The government announced a tender to import 151,000 tonnes of wheat for April-June shipment Tuesday, to be concluded Thursday.

However, it plans to increase the price at which it sells wheat to flour millers by 30% starting April 1 to reflect sharp increases in global wheat prices since the beginning of the year.