July 5, 2006

 

Asia Soybean Outlook: Premiums may rise on weather, freight

 

 

Premiums for soybeans delivered to Asia may rise in the week amid U.S. weather concerns and higher ocean freight rates.

 

In the last five sessions, soybean futures on the Chicago Board of Trade have ended stronger, spurred by weather forecasts of hot and dry conditions for soybean-growing regions in the U.S.

 

The cost of ocean freight has also been climbing over the past fortnight, especially on the U.S. Gulf-Japan route, which may further support premiums, said a trader in Tokyo.

 

Ocean freight rates for the U.S. Gulf-Japan route is currently around US$44 a metric tonne for panamax-sized cargoes.

 

The trader added, "The freight rate seems to have peaked, so hopefully further gains could be modest."

 

Meantime, demand for soybeans in Japan has been holding steady over the past few weeks, and traders don't see any near-term spike.

 

At present, premiums for soybean delivered to Japan from the U.S. are at 180 U.S. cents a bushel above the CBOT September contract.

 

In South Korea, state-run Korea Agro-Fisheries Trade Corp. may hold a tender over the week to buy 100,000 tonnes of non-genetically modified U.S. No. 1 soybean, a company official said.

 

He added that the company had canceled a tender to buy a similar quantity of soybeans last week, as it wanted more trading houses to participate in the tender.

 

In Taiwan, the Kaosiung branch of Breakfast Soybean Procurement Association rejected all bids for its tender to buy up to 60,000 tonnes of soybeans last week, without giving any reasons.

 

There has been no major soybean import deals in either South Korea or Taiwan, two major soybean importers, over the last seven days.

 

In China, soybean imports continue to be sluggish as domestic stocks swell. It is therefore unlikely traders will book many fresh soybean import orders before August when the new U.S. soybean crop will be harvested.

 

Meantime, in its latest forecast, China National Grain & Oils Information Center said domestic soybean output in 2006 may fall 2.9% to around 15.9 million tonnes.

 

Such a decline could be attributed to a 5.1% drop in areas planted to soybean crop, which would stand at 9.1 million hectares in 2006.

 

In China's local markets, soybean and soymeal prices continue to tumble, weighed down by large stocks and thin demand.

 

"(Soymeal) users are preferring to wait and see, with very low buying intention (at this point of time)," said chinafeedonline.com, a trade portal.

 

In other news, Thai imports of soybeans sharply fell in January-to-May, while soymeal imports rose.

 

Soybean imports in January-to-May were at 275,148 tonnes, 39.64% lower on year, while soymeal imports were up 8.15% at 680,065 tonnes.

 

A major reason for the fall in soybean imports was more soy-using industries are preferring to import soymeal rather than crush soybeans in Thailand.

 

In India, planting of soybeans is down 23% on year in June 1-30, at 149,000 hectares.

 

Analysts said oilseeds farmers are increasingly switching to sowing pulses due to high prices in the local market.