April 27, 2011

 

Thai processors secure 2011 food-grade soy needs

 

 

Many Thai processors of food-grade soy secured their import requirements for 2011, and are now negotiating deals with US suppliers for 2012, trading executives said Tuesday (Apr 26).

 

Locking in prices for import deals early allowed processers to save more than US$100 a tonne on costs at a time when benchmark Chicago soy futures are extending gains, although processers will feel the pinch next year, they said.

 

"A few processors not only purchased their full 2011 needs late last year, but also locked in the final price around the same time," one executive said on the sidelines of a grains conference.

 

Purchases are done on a premium basis over soy futures on the CBOT, and buyers have the option to lock in the futures price on a particular date to calculate the purchase price.

 

Processors such as soy-milk manufacturers locked in US food-grade soy during the October-December period between US$600 a tonne and US$670 a tonne, cost and freight, for shipment in containers. Offers for prompt shipment are currently around US$770/tonne while offers for January 2012 shipment are around US$775/tonne.

 

CBOT near-month soy futures were around US$9 a bushel late last year, and some market participants expected a downward correction due to a strong harvest in the US. Instead, prices have risen further on strong demand from China and weather-related concerns in corn and wheat.

 

CBOT May soy futures are now around US$14/bushel.

 

Non-genetically-modified food-grade soy command a heavy premium, typically trading US$3.00-$3.50 above CBOT futures, excluding freight. On a delivered basis, they are currently around US$200 a tonne more expensive than feed-grade soy in Southeast Asia.

 

Soy processors who delayed pricing their cargoes are now having to pay much higher prices, one executive involved in such deals said.

 

Still, he said, even processors who covered their needs early for this calendar year will need to pay higher prices for 2012 as the futures market remains bullish.

 

Last week, the International Grains Council revised its forecast for Thailand's total imports of soy--for both food and feed--by 6% to 1.7 million in the marketing year ending Sept. 30. It earlier projected imports to be unchanged from 2009-10 at 1.6 million tonnes.