June 7, 2006

 

Asia Soybean Outlook: Premiums may fall on good US weather

  

 

Premiums for soybeans delivered to Asia may fall in the week ahead, as good weather conditions for developing soybean crops in the U.S. are likely to pressure Chicago Board of Trade soy futures.

 

Over the last two sessions, CBOT soy futures have tumbled on bearish weather reports and weak U.S. soybean exports.

 

In Asia, some Chinese buyers are expected to remain sidelined after importing large quantities from February to early May.

 

The world's biggest soybean buyer is expected to import around 2 million metric tonnes of soybeans in June, almost 1 million tonnes less than estimated May imports, an official at a Beijing-based grains company said.

 

Since China's domestic stocks of soybeans remain quite high, any increase in soybean imports are expected to take place only in August, the official added.

 

"The harvesting of U.S. soybeans will begin in August. Besides, domestic stocks would also have come down by then, making it an opportune time to resume a fast pace of imports," said the official.

 

On Wednesday, Brazilian soybeans delivered to China remained at a premium of 120 U.S. cents a bushel above the CBOT July contract, unchanged from a week earlier.

 

Prices in China's major soybean producing regions continued to fall, pressured by imports and lower international futures prices.

 

Crushers were reluctant to buy domestically-grown soybeans, which are more expensive than imported ones, especially with a large volume of foreign-origin soybeans at the port and a slow recovery in domestic feed demand.

 

According to commodity news portal Chinafeedonline.com, demand for soymeal continued to remain weak in China, with soymeal prices also pressured by ample domestic soybean stocks.

 

Over the past seven days, no soybean import deals were reported in South Korea and Taiwan.

 

Meanwhile, Taiwan's soybean imports in 2006 are likely to remain around 2.4 million tonnes, little changed from last year, an industry executive said.

 

"As far as soybean use is concerned, there hasn't been any significant change in the business climate so far this year. Therefore, not much change in imports is seen," said TTET Union Corp. Trade Manager Leon Chen.

 

TTET Union Corp., which is headquartered in southern Taiwan, is one of the largest soybean processors in the country.

 

Currently, Taiwan's soybean imports are quite evenly divided between the U.S. and Brazil, Chen said.

 

"This year, the usual sharp fall in soybean prices in Brazil (didn't happen) due to an appreciation of the real, so U.S. soybeans have remained quite competitive so far in 2006," Chen said.

 

In other news, two industry lobby groups in India this week released widely varying export data for soymeal, confusing analysts and market watchers.

 

According to the Soybean Processors Association of India, or SOPA, India's soymeal exports increased to 224,197 tonnes in May from 153,162 tonnes in the year-earlier period.

 

However, the Solvent Extractors Association, or SEA, another industry group, said soymeal exports in May declined to 140,075 tonnes from 156,100 tonnes in May 2005.