February 22, 2006

 

Asia Soybean Outlook: Premiums to be flat, futures eyed

 

 

Premiums of soybeans delivered to Asia are likely to remain unchanged in the week ahead as buyers are sidelined due to recent swings in soy futures on the Chicago Board of Trade, trade participants said.

 

Panamax-size cargoes were offered at $36 a metric tonne on the benchmark route from the U.S. Gulf to Japan Wednesday, unchanged from last week, traders said.

 

Freight rates have been gradually increasing in the past few months but aren't expected to rise above $40/tonne, capped by an increase in the number of vessels available, said a Tokyo-based trader.

 

Also putting a lid on freight rates is sluggish feed demand out of China, the world's largest soybean buyer, due to concerns of further bird flu outbreaks.

 

China's Agriculture Minister Du Qinglin said Tuesday that the country should brace for a likely large-scale bird-flu outbreak in spring.

 

In Japan, soybean crushers are currently buying mainly for April shipment as they have already bought most of what they need for March shipment.

 

U.S. soybeans shipped out of the U.S. Gulf were offered at 149 U.S. cents per bushel over the CBOT May contract, C&F to Japan, for April shipment, up a tad from last week's 148 cents/bu.

 

In the futures market, CBOT soybean and soymeal futures ended lower Tuesday on technical sales as Friday's gains were deemed overdone, on forecasts for rains in Argentina's soy belt this week, and on worries about the spread of bird flu in Europe.

 

CBOT May soybeans ended down 13 1/2 cents at $6.01 a bushel, while CBOT May soymeal ended down $5.00 at $182.20 a tonne.

 

In South Korea and Taiwan, buyers are adopting a wait-and-see approach as they monitor the Chicago soy futures market.

 

"Chicago futures are quite volatile at the moment. Many buyers are waiting for prices to stabilize before buying," said a Seoul-based grains trader.

 

Meanwhile, Taiwan Sugar Corp. will conclude a tender Wednesday for two combined cargoes totaling 53,000 metric tonnes of U.S. No. 2 yellow corn and U.S. No. 2 yellow soybeans, said a Taipei-based trader.

 

TSC will buy one cargo comprising 23,000 tonnes of corn and 12,000 tonnes of soybeans to be delivered either March 1-15 from the U.S. Gulf or March 16-30 from the Pacific Northwest.

 

The other cargo is for 10,000 tonnes of corn and 8,000 tonnes of soybeans to be shipped either April 11-30 from the U.S. Gulf or April 26-May 15 from the Pacific Northwest, the trader said.