March 22, 2006

 

Asia Soybean Outlook: Premiums to fall on Brazil harvest

  

 

Premiums for soybeans delivered to Asia may fall in the week ahead, as the ongoing South American soybean harvest is likely to pressure international prices.

 

U.S. soybean futures were mostly lower in the week to Tuesday, as an increase in the supply of South American soybeans reduced demand for U.S. exports.

 

In Asia, China continues to buy soybeans from both the U.S. and South America, although traders said the country is now increasing its purchases of Brazilian soybeans.

 

"Chinese soybean purchases have exceeded expectations so far this season. Brazilian soybean exports to China will probably reach a record 2.9 million tonnes in the September 2005-March 2006 period," Hamburg-based Oil World said on its Web site.

 

The international marketing year for edible oil runs from September to August.

 

Separately, China has authorized imports of genetically modified soybeans from Brazil for five years, Brazil's Agriculture Ministry said this week.

 

Previously, China approved GMO soybean imports from Brazil on an annual basis.

 

"We've managed (to meet) the maximum requirements to ship GMO soy that the Chinese law permits," said Brazilian trade negotiator Euclydes Mariano.

 

In other news, the U.S. Department of Agriculture said China's soybean imports in the 2006-07 marketing year beginning Sept. 1 will likely rise to 28.5 million tonnes from an estimated 26.8 million tonnes in 2005-06.

 

The USDA said China's growing population and incomes have increased the country's demand for meat, poultry products, fish and edible oils.

 

In China's domestic markets, soybean prices continued to fall as farmers are selling their soybean stocks to raise cash for the spring sowing season that begins in April.

 

Analysts said China's soymeal prices are falling as large quantities of soybeans are arriving on its markets.

 

In Japan, soybean importers have largely covered their soybean requirements until April.

 

A trader at a Tokyo brokerage said there may be reduced amount of soybean buying worldwide next week.

 

Japanese importers don't see much difference in premiums between U.S. and South American soybeans, the trader said.

 

"I think U.S. soybeans are still quite competitive," said the trader.

 

Premiums for U.S. soybeans shipped to Japan were quoted around 150 U.S. cents/bushel over CBOT May contract, unchanged from last week.

 

In South Korea and Taiwan, there were no soybean or soymeal import deals reported this week.

 

Meanwhile, bird flu outbreaks remain a major concern for soymeal sales in many Asian nations, as soymeal is largely used as poultry feed.

 

This week, two new outbreaks of the deadly H5N1 bird flu strain were confirmed in poultry in a northern Malaysian state.

 

Bird flu cases were also confirmed in Pakistan for the first time.

 

In India, an outbreak of bird flu since Feb. 18 has cut soymeal prices further. Soymeal on a free-on-board basis was quoted around US$191/tonne, down from US$198/tonne on March 1.