April 26, 2006

 

Asia Soybean Outlook: Soybean imports may slow down

 

 

Asian soybean imports may slow down in the week ahead as China, the world's largest importer of soybeans, is expected to buy less soybeans.

 

"Chinese buyers have imported a lot of soybean over the last several weeks and now the domestic market is flooded with supplies," said a trader with one of China's biggest grains trading companies, based in Beijing.

 

The trader said Chinese soybean importers are now buying a lesser amount of soybeans from South America and the U.S.

 

"Over the past week, I heard of only one or two cargoes being imported by Chinese buyers," the trader added.

 

However, analysts expect overall Chinese soybean imports to hit 3 million metric tonnes this month, which may be the highest monthly import amount so far in 2006.

 

Meanwhile, the trade news Web site chinafeedonline.com reported that China imported 293,000 tonnes of soymeal from India during the January-March period and may end up buying 550,000-600,000 tonnes of Indian soymeal for the January-May period.

 

China boosted its soymeal imports from India in recent months, most likely because of the cheaper prices of Indian soymeal. China has a massive domestic soybean crushing capacity and isn't a significant soymeal importer.

 

In China's local markets, soybean prices continue to fall, as crushers keep cutting their buying prices in order to improve their balance sheets, analysts said.

 

According to analysts, because soymeal prices are falling, crushers can only chose to lower their costs and keep their buying price for soybeans as low as possible.

 

Although current soybean prices in China are already lower than the growing cost, some farmers are still selling soybeans, since many of them urgently need money to buy things necessary for spring plowing.

 

Premiums for soybeans delivered to China from Brazil is around 130 U.S. cents/bushel above the Chicago Board of Trade July contract, unchanged from last Wednesday.

 

Also, premiums of soybeans delivered to Asia may rise in the week ahead, as CBOT soy futures ended the last two sessions this week higher.

 

Analysts said lower canola planting in Canada (a competing oilseed crop), as well as indications that some farmers in the U.S. may increase corn planting at the expense of soybean acreage, may keep CBOT soybean futures well supported.

 

In other news, India's soybean output in 2006 may be hit, if the India Meteorological Department's forecast of below normal monsoon rains this week proves correct.

 

India's soybean crop, which will be planted in June, depends critically on the June-September monsoon rains for sustenance. Soybeans are one of India's biggest oilseeds crops.

 

The meteorological department has said the monsoon rains will likely be around 93% of normal levels.