June 6, 2007

 

Asia Grain Outlook on Wednesday: Soybean prices may soar on CBOT, China

 

 

Imported soybean prices in Asia may soar in the remainder of the week on a firm rising trend in Chicago Board of Trade soybean futures and strengthening Chinese demand.

 

Global edible oil prices have risen sharply due to increasingly strong demand from China, which has helped strengthen soybean fundamentals. In addition, weather forecasts indicate drier conditions for soybean growing areas in the U.S. at a time when soybean planting is in full swing, further supporting CBOT prices.

 

The U.S. is the world's largest soybean producer.

 

Chinese importers are stocking up on soybeans as ocean freight rates are falling while edible oil prices in China are rising rapidly.

 

Last week, Chinese crushers bought around 13-16 soybean cargoes for shipment in July and August, commodities analysis firm JCI Shanghai said, around triple the four to six cargoes they've bought each week in the past several weeks.

 

Of the 13-16 soybean cargoes booked last week, 8-9 cargoes are from Argentina, three to four cargoes are from the U.S., while two to three cargoes are from Brazil.

 

The premium of delivering soybean from Argentina to China has fallen to 145-153 U.S. cents/bushel to the CBOT September contract, compared with 178-186 cents/bushel a month earlier.

 

Similarly, the premium for delivering soybean to China from the U.S. has fallen to 154-176 cents/bushel to CBOT September contract, compared with 178-186 cents/bushel a month earlier.

 

At the same time, prices of corn, a soybean substitute, show no signs of receding in China, as corn supply is expected to remain tight until October, when the new corn harvest in China usually begins.

 

An ongoing corn planting season in major producer U.S. means CBOT corn prices are largely driven by weather conditions. Indications of short-term drier weather in corn planting areas in the U.S. may support prices, but there's not much else driving corn prices, traders said.

 

On the tenders front, major Asian importers South Korea and Taiwan have been quiet so far this week, although feed and food buying groups in both countries could intensify their fourth quarter corn and soybean buys in coming weeks to lock in prices for the new U.S. crop, which is due to arrive on the market by October.