March 29, 2006

 

Asia Soybean Outlook: Premiums may fall on Brazil harvest

 

 

Premiums for soybeans delivered to Asia are likely to fall in the week ahead, as a record soybean crop is being harvested in Brazil, pressuring the premiums.

 

China is expected to turn out a strong import performance in March, with estimates of soybean imports ranging from 2.3 million-2.9 million tonnes, according to various analysts.

 

An analyst from Shanghai-based JCI, projected soybean imports by China in March to range from 2.7 million-2.9 million tonnes.

 

Analysts said while most of the March soybean shipment will come in from the U.S., April soybean shipments will likely be from South America.

 

China's soybean imports fell 25.4% on the year to 1.12 million tonnes in February, while they were down 16.2% on the year at 2.81 million tonnes for the January-February period, the General Administration of Customs said.

 

The Hamburg-based Oil World magazine has said China's soymeal demand is picking up due to a recovery in the production of poultry, as bird flu concerns subside, as well as demand from the piggeries and fisheries sectors.

 

The magazine said China's October 2005-February 2006 soymeal imports were at 350,000 tonnes, up from a mere 43,000 tonnes during the same period last year.

 

In China's local markets, soybean prices are falling as they are dragged down by cheaper imports, whose prices are still falling.

 

Traders said unless import prices rise in April, led by gains in the Chicago Board of Trade soy futures, local prices would continue to remain pressured.

 

Brazil's soybean harvest and the resulting softening of soybean prices are also likely to encourage more soybean and soymeal imports by Taiwan and South Korea.

 

In the week to Wednesday, Taiwan's Breakfast Soybean Procurement Association, or BSPA, bought 120,000 metric tonnes of Brazil-origin soybeans from trading houses, Bunge and Agrex.

 

Premiums for soybean delivered from the U.S. to Taiwan are around 107 U.S. cents a bushel above the CBOT July contract, for May-June shipment.

 

Taiwan Sugar Corp is seeking 12,000 tonnes of U.S.-origin soybean in a tender to be concluded on March 31.

 

South Korean feedmillers are also likely to step up buying soymeal in the next few weeks, as cheaper South American soymeal becomes available.

 

Traders said feed buying groups such as Major Feedmill Group and Korea Feed Association may invite tenders to buy South American soymeal in the coming weeks.

 

In India, traders said falling soymeal exports and a drop in local demand because of bird flu have pushed soymeal prices lower.

 

"The bird flu outbreak has put many Indians off poultry products, which has inevitably hurt both poultry and soymeal sales," said a soymeal trader in Indore.

 

Bird flu was first reported in India on Feb. 18.

 

Traders said Indian soymeal exports traditionally declined from March to August as the new soybean crop from South America hits the market.

 

Meanwhile, on Tuesday fresh cases of bird flu were detected in a poultry sample from the central Indian province of Madhya Pradesh, which is likely to pressure soymeal prices further.