May 30, 2006

 

Asia Soybean Outlook: Premiums may remain little changed

  

 

Premiums for soybeans delivered to Asia may not change much in the week ahead, as bullish and bearish factors on the Chicago Board of Trade soy futures may balance each other out.

 

On the bearish side, weather for the U.S. soybean crop seems favorable, while on the bullish side, increased soyoil demand from ethanol plants may support soybean prices.

 

Meantime, demand from the world's biggest soybean importer, China, continues to be slow.

 

A trader in one of the country's biggest grains buying companies in Beijing said China's massive soybean imports from February to early May have dampened enthusiasm for further imports.

 

"Soy crushers have yet to figure out how soon these stocks will be used up before fresh supplies are needed," said the trader.

 

At present, the premium for soybeans shipped to China from Brazil is around 110 U.S. cents a bushel above the CBOT July contract compared with 130 cents/bu last Wednesday.

 

Soybean prices in China's major producing regions continue to be little changed as demand and supply dynamics haven't changed much over the past several days, besides a lack of direction from either CBOT soy futures or China's soybean futures.

 

Meantime, a report on chinafeedonline.com, a trade news portal, said China's soymeal price has already fallen to near four-year lows and most traders believe it is unlikely to fall much further.

 

It added that some feed companies, especially in eastern China, have started rebuilding their soymeal stocks, which may provide some strength to soymeal prices.

 

In expected soybean import deals this week, Taiwan's Breakfast Soybean Procurement Association, or BSPA, Kaosiung branch, is likely to buy 30,000-60,000 metric tonnes of soybeans in a tender to be concluded Thursday.

 

BSPA is seeking delivery of soybeans to Taiwan July 1-15.

 

Over the past seven days, no import deals in soybeans or soymeal were reported in either Taiwan or South Korea.

 

In other news, prospects of soybean and peanut crops in India look quite bright as the June-September monsoon rains arrived May 26, well ahead of the scheduled June 1 date and have so far been progressing smoothly.

 

"If the monsoon now advances without any delay, it will benefit the farmers, and sowing of soybeans and groundnut will be over by mid-June. But we will have to see the spread of the rains during the entire season," Adani Exports President Atul Chaturvedi told Calcutta-based Telegraph newspaper.

 

Meantime, the Press Trust of India quoted Soybean Processors' Association of India chairman Rajesh Agrawala as saying soybean output in India's Madhya Pradesh province may touch 4.4 million tonnes in 2006 from around 4 million tonnes in 2005.

 

He said the provincial government's decision to cut the sale price of good quality soybean seeds by INR2,000/tonne will help more farmers purchase these seeds, which will lead to increased productivity.

 

Madhya Pradesh is India's largest soybean growing province. Soybean and peanut crops are sown across India from June to August and harvested in September and October.