June 28, 2006

 

Asia Soybean Outlook: Premiums may fall on U.S. weather

 

 

Premiums on soybeans delivered to Asia may fall in the week ahead, as CBOT soy futures are likely to remain under pressur.

 

Expectations of good weather ahead for the U.S. soybean crop and sluggish export demand for U.S. soybeans in the face of continued competition from Brazil may keep soy futures lower.

 

Over the past five sessions, Chicago Board of Trade soy futures settled mostly lower.

 

Asian demand for soybeans continues to be sluggish, with new import orders from China slowing over the last few weeks.

 

After a feverish pace of soybean imports from February to early May, Chinese importers are now cutting back on fresh orders as domestic stocks have swelled.

 

"Over the past week, I think only a few soybean vessels have been booked," said a trader in Beijing.

 

Traders expect little new import demand to emerge in July and a revival of Chinese imports may not take place until August, once the U.S. new crop harvest gets underway.

 

Traders estimate June soybean import arrivals in China at 2.8 million metric tonnes, while July imports are pegged at 2 million tonnes.

 

China's soybean imports rose 11.4% on year in May to 2.41 million metric tonnes, the General Administration of Customs said this week.

 

In the January-May period, soybean imports rose 9.6% on year to 10.39 million tonnes.

 

The premium for soybeans delivered to China from the U.S. remain unchanged from last Wednesday at 130 U.S. cents/bushel above the CBOT September contract.

 

Ocean freight costs for soybeans shipped to China from U.S. also remained flat over the last week, at US$42/tonne.

 

In China's local markets, soybean prices continue to fall on the huge volume of arrivals.

 

Analysts said weak demand for soymeal and soyoil, in addition to the presence of a large quantities of imported soybeans in the country, is weighing heavily on local prices. In Taiwan and South Korea, no soybean import tenders were awarded over the past seven days, with no indications of any improvement in demand this week.

 

Taiwan Sugar Corp. had floated a tender this week to purchase 10,000 tonnes of soybean, but passed on the tender on Wednesday, without giving a reason.

 

In India, sowing of the soybean crop has been delayed by 7-10 days as monsoon rains eluded central India, where the oilseed is chiefly grown.

 

However, the weather department has forecast ample rains for central India this week, which may encourage sowing of soybean crops and avert a sharp decline in output.

 

Some agricultural analysts have also said that the acreage of India's summer-sown oilseeds crops, such as soybeans and peanuts, may fall this year, as farmers switch to more lucrative crops such as cotton, sugarcane and pulses.

 

India's summersown oilseeds crop are sown in June and July and harvested in September and October.