May 24, 2006

 

Asia Soybean Outlook: Premiums may fall on bearish CBOT

 

 

Premiums for soybeans delivered to Asia may fall in the week ahead, as planting conditions for the U.S. crop remain quite favorable.

 

"There is nothing bullish in the soybean market from a supply-demand view point, leaving weather the (only) wild card once U.S. soybean planting is over," said U.S.-based analyst Tim Hannagan in an online commentary.

 

In the Asian market, China's buying has slowed down considerably over the last few months.

 

A Beijing-based analyst said the country's domestic soybean stocks are hovering around the 3-million-tonne mark, so any immediate spurt in imports is unlikely.

 

The analyst said over the next 4-5 weeks, Chinese importers will continue to buy soybeans at a leisurely pace.

 

However, since a lot of soybeans has already been committed by exporters in March and April, May soybean shipments to China may touch 3 million tonnes.

 

Analysts said June shipment may be even higher, at about 3.5 million tonnes.

 

At present, China is sourcing most of its soybean needs from South America.

 

The premium for soybeans delivered to China from Brazil remains at 130 U.S. cents/bushel above CBOT July contract, unchanged from last Wednesday.

 

Soybean prices in China's major producing regions continued to rise, with rising soyoil prices lending support to soybean prices, as less soyoil was being imported by China due to higher international prices, analysts said.

 

In other parts of Asia, there may be some scattered buying of soybeans and soymeal this week.

 

Among the expected buys this week, Taiwan Sugar Corp. is likely to buy 12,000 tonnes of U.S.-origin soybean in a tender to be concluded on late Wednesday.

 

In the meantime, Korea Feed Association is likely to buy 110,000 tonnes of South America-origin soymeal in a tender to be concluded on Thursday.

 

South Korean buyers have, over the past few months, switched completely to buying soymeal from South America, since South American soymeal prices are quite lower than Indian soymeal prices.

 

However, once the Indian soybean processors begin crushing the new crop bean around September, buyers in Asia are likely to switch back to buying Indian soymeal.

 

In other news, A.R. Sharma, president of the Solvent Extractors Association of India, an industry lobby group, has said that if the India Meteorological Department's forecast of below-normal monsoon rains proves correct, it can adversely affect India's oilseeds output, mostly soybeans and peanuts.

 

However, he said the even distribution of rain in all oilseed-growing areas could help reduce the damaging effects of the overall low volume of rains.

 

India's oilseed crop will be sown from next month. The crop is critically dependent on June-September monsoon rains for sustenance, due to lack of artificial irrigation facilities in oilseed-growing areas.

 

The crop will be harvested in September.