May 26, 2008

 
Asia Grain Outlook on Monday: Soybean price may rise on Argentine strife
 

 

Soybean prices may continue to rise in the week ahead as continued strife between farmers and government in Argentina is raising the specter of another farmers' strike.

 

Argentina is the world's third-largest exporter of soybean, after the U.S. and Brazil.

 

On Friday, Chicago Board of Trade's July soybean contract settled 43 1/4 cents higher at US$13.68/bushel. CBOT is closed Monday for the Memorial Day holiday.

 

A Morgan Stanley research report last week, however, lowered its average price target for soybeans in the 2007-08 marketing year ending in August to US$14/bushel from an earlier estimate of US$15/bushel.

 

The report said that record high soybean prices "look to have done their job" buying back acres from corn, especially in the U.S.

 

However, the report said that soybean prices will likely rise in the next two marketing years, with average soybean price targets of US$15 for 2008-09 and US$16 for 2009-10.

 

"Despite the increase in US soybean plantings, inventories adjusted for demand remain tight and are likely to get tighter, ultimately begging for increased South American production - which may struggle to grow," said the report.

 

Meantime, the world's biggest soybean importer - China - bought four to five cargoes of soybeans from the U.S. and Brazil last week.

 

The soybeans bought from Brazil are to be delivered in July, while the soybeans from the U.S. are to be delivered in November, said an analyst with JCI Shanghai.

 

The market believes that the November cargoes were bought by the state reserve system. Some Chinese traders are putting off soybean importers for the time being as they remain concerned about the fallout of the farmers' opposition to the government's policies in Argentina.

 

Demand is also emerging for wheat in Asia. Bangladesh is seeking 100,000 metric tonnes of wheat in a tender which will conclude on June 2.

 

Pakistan is seeking 75,000 tonnes wheat in a tender that will be concluded on June 7.

 

Both the Pakistan and Bangladesh tenders have been floated by government agencies, to build up stocks and control rising domestic food prices.

 

Last week in a private deal, South Korean flour mills bought 22,000 tonnes wheat in tender from trading house Cargill. Traders didn't disclose the price at which the wheat was bought.