February 26, 2004

 

 

High US Soybean Prices Dampen Exports To Asia

 

High US soybean prices dampen exports into Asia, but are likely to invite cheaper Brazilian imports into the country, traders said on Wednesday.

 

Drought-reduced production in the United States and concerns over wet weather in Brazil damaging the crop have propelled the latest surge in CBOT soybean futures.

 

"Exports have been coming down relative to last year," said grain analyst Dan Basse, president of research firm AgResource Company.

 

U.S. soybeans shipped to China were now priced some 25 cents a bushel above Chinese domestic soybeans, he added.

 

Exporters said high prices, a deadly bird flu virus in China that is a threat to the country's poultry sector and poor crush margins have combined to slow China's demand.

 

Some traders were expecting Thursday's USDA weekly export sales of U.S. old crop soybeans to show a negative amount due to cancellations. But generally, traders were expecting exports for the week ended Feb. 19 at 50,000 tonnes to 200,000 tonnes.

 

USDA soy export inspections through Feb. 19 are running about 7 percent below last year's torrid pace. U.S. production fell 12 percent last year due to drought and season-ending U.S. stocks on Aug. 31 are now projected at 27-year lows.

 

That extremely tight supply outlook continues to feed interest in imports of either soymeal or soybeans. Traders said the soaring U.S. futures market is aiding that scenario.

 

The latest CBOT surge was close to making soy imports from Brazil economical, or comparable in price to U.S. supplies when including the cost to ship to crushers in the Midwest.

 

U.S. soybeans for March shipment in the CIF Gulf barge market on Wednesday were offered at 36 cents a bushel premium the CBOT March, or about $352 per tonne, exporters said.

 

By comparison, Brazilian soybeans for March were being offered at $1.20 a bushel discount to the CBOT May, or $297 a tonne FOB, which excludes shipping costs, they said.

 

Ocean freight from Brazil to the U.S. Gulf was estimated at about $60 per tonne, with additional costs for shipping the soybeans up the Mississippi River to Midwest processors to add another $15 to $20 per tonne, they said.

 

"It's getting awful close," one exporter said, referring to the price of U.S. beans and the cost to import from Brazil.

 

The exporter also said China has been "missing" from the U.S. market this week, although he added that there was no talk of China seeking to cancel any purchases.

 

"The crush margins (in China) are terrible. They have not been buying from the U.S. or South America," he added.

 

He said there have been purchases from Japan, but overall interest from Asia, where countries are still fighting a deadly bird flu that has decimated poultry flocks, has been limited.

 

USDA said in a report this week that soybean and soymeal imports do not pose a significant threat in spreading a destructive rust fungus prevalent in Brazilian beans.

 

That was seen as clearing a hurdle for potential U.S. soy importers.