April 12, 2006

 

Asia Soybean Outlook: Premiums may fall on U.S. futures

 

 

Premiums of soybeans delivered to Asia may fall in the week ahead, as U.S. futures are likely to keep sliding.

 

Over the last two sessions, CBOT soybean futures have been lower, pressured by good supplies and weak export demand for U.S. soybeans, as the South American soybean harvest picks up.

 

China's import of soybeans may slow down in the coming weeks as local prices of soymeal and soy oil are currently quite low, a trader in a Shanghai-based multinational trading house said.

 

"While current international prices of soybeans are quite competitive, local prices of soymeal and soy oil don't justify the current high level of imports. So we may see a bit of cooling off on imports," the trader said.

 

At present, the premium for soybeans delivered to China from Brazil is unchanged from last week, at 120 U.S. cents/bushel above the CBOT July contract.

 

However, April may still be a good month for Chinese soybean imports, with different analysts predicting imports between 2.6 million-3.2 million tonnes.

 

In China's local markets, soybean prices continue to slide as crushers are unwilling to buy, anticipating prices to fall further.

 

Traders said the outlook for soybean prices in China remains bleak for the near-term.

 

In South Korea, demand for soymeal may pick up in the week ahead as importers begin shopping for July-September shipments.

 

Last week, South Korea's Major Feedmill Group, or MFG, struck a private deal with Cargill to purchase 110,000 tonnes of South American soymeal for a September-October shipment.

 

This week, Nonghyup Feed Inc. is likely to announce a tender for buying soymeal.

 

In other news, last week 13 Chinese soybean processing companies signed 10 contracts with U.S. agricultural exporters to buy 4.98 million metric tonnes of U.S. soybeans and 20,000 tonnes of U.S. soyoil in calendar year 2006.

 

The 13 companies represent 67% of the soybean purchasing power in China.

 

However, a trader in Shanghai said the agreement won't immediately increase Chinese demand for U.S. soybeans.

 

"It's more of an intention to buy rather than actual buy orders with delivery dates," the trader said.

 

In India, export of soymeal during the financial year that ended March 31, 2006 was 3.4 million tonnes compared with 1.86 million tonnes in the previous financial year, according to data released by the Solvent Extractors' Association last week.

 

The association said improved crushing margins for Indian soybean processors and good demand for soymeal from Vietnam, Japan, South Korea, China, Indonesia, Taiwan and Thailand helped boost soymeal exports.

 

India's soymeal exports in March totaled 712,175 tonnes compared with 225,825 tonnes in the same month last year.

 

Also, a U.S. Department of Agriculture report said Pakistan's soybean imports in the marketing year ending Aug. 31, is expected to 75,000 tonnes compared with 25,000 tonnes in the previous marketing year.

 

"Oilseed were imported due to lower tariffs structure as compared to tariffs on meal and oil, which influenced crushing margins significantly," the report added.