April 2, 2007

 

Asia Grain Outlook on Monday: Soybean imports may fall on US crop data

 

 

Asian soybean imports are likely to take a hit over the next few weeks, as a forecast of a sharp decline in acres planted to U.S. soybean crop may boost prices.

 

On Friday, the U.S. Department of Agriculture forecast that U.S. farmers will plant 67.140 million acres of soybeans this year, an 11% decrease from 2006 due mainly to a switch to corn crops. If realized, soybean acreage would be the lowest since 1996, the USDA reported.

 

Chicago Board of Trade soybean futures fell Friday despite the bullish news, largely because the higher-than-expected forecast of gains in U.S. corn acres overwhelmed traders and led to fall in wheat, grain and soybean futures.

 

Asia's biggest soybean importer - China - has already begun paring fresh soybean orders, with bookings last week at three to four cargoes down from 10 cargoes the preceding week.

 

"The main reason causing the decrease in Chinese soybean buys in international market is the quite high offers given by both the U.S. and Brazilian sellers," said an analyst with commodity analysts JCI Shanghai.

 

The analyst added that most of the three to four cargoes booked this week were from Argentina, where prices are lower compared with the U.S. and Brazil.

 

According to JCI, the premium for U.S. soybean delivered to China is at 180-185 U.S. cents/bushel to the CBOT May contract, while the premium for Brazilian soybean delivered to China is at 155-160 cents/bushel to the CBOT May contract.

 

On the other hand, Argentine soybean is offered at a premium of 115-122 cents/bushel to the CBOT May contract.

 

All premiums correspond to delivery to China in May.

 

Analysts added that continued weakness in domestic feed demand is also weakening Chinese soy crushers' interest in soybean imports.

 

Meantime, prices for both corn and wheat are likely to fall more in the week ahead, as the market may continue to chew on data that both corn and wheat acres plant in the U.S. this summer are likely to show on-year gains.

 

However, in some bullish news for wheat, India's federal government will allow "restriction-free" imports of wheat until Dec. 31, 2007, a notification issued by the Directorate General of Foreign Trade said Friday.

 

"The import policy for wheat will remain in abeyance until Dec. 31, 2007. During this period, imports of these items will be allowed freely," the notification said.

 

India imported more than 6 million tonnes of wheat last year, and various analysts expect the country's state-run and private companies to jointly import between 3 million-5 million tonnes this year.