August 2, 2006

 

Asia Soybean Outlook: Supply outlook offsets freight rise

 

 

Premiums of soybeans delivered to Asia are likely to remain steady in the week ahead as higher freight rates are offset by expectations of greater availability of soybeans from the U.S., trade participants said.

 

Panamax-size cargoes were offered at US$42 a metric tonne on the benchmark route from the U.S. Gulf to Japan Wednesday, up from last week's US$40/tonne, traders said.

 

Freight rates have been gradually increasing in the past few months due to tight supply of vessels in the market, said a trader in Japan.

 

The higher shipping costs, coupled with recent volatility in soybean futures in Chicago due to uncertainties surrounding weather conditions in the U.S., have kept many Asian importers sidelined.

 

With soybeans moving into their critical reproductive stage, weather remains the dominant influence on prices, said a Seoul-based trader.

 

In South Korea, buyers are adopting a wait-and-see approach as they monitor the Chicago soy futures market.

 

"Chicago futures are quite volatile at the moment. Many buyers are waiting for prices to stabilize before buying," said a Seoul-based grains trader.

 

South Korea's CJ Corp. is expected to re-tender for 55,000 tonnes of soybeans this week after passing on a tender last week because prices were too high.

 

Chicago Board of Trade soybean futures ended lower Tuesday, trading defensively amid the movement of beneficial rain showers into the Midwest.

 

August soybeans ended 6 cents lower at US$5.73 1/2, while November soybeans finished 6 cents lower at US$5.93 3/4.

 

"This could be the break in the hot and dry weather we have seen so far. Once more precipitation comes through, there will be a plentiful crop to be harvested in a month's time," said a Tokyo-based grains trader.

 

More supply in the market would keep a lid on any rise in premiums due to rising freight rates and falling futures prices, he added.

 

In Japan, soybean crushers are currently buying mainly for September-October shipment.

 

U.S. soybeans shipped out of the U.S. Gulf were offered at 160 U.S. cents per bushel over the CBOT November contract, C&F to Japan, for September shipment, up a tad from last week's 155 cents/bu.

 

Meanwhile, Taiwan's Breakfast Soybean Procurement Association in Kaohsiung will seek up to 60,000 tonnes of either U.S. or Brazilian soybeans in a buy tender to be held Wednesday, said an association official.

 

BSPA Kaohsiung will buy one cargo of 30,000-60,000 tonnes of soybeans to be shipped either Sept. 11-25 from the U.S. Gulf or Brazil, or Sept. 26-Oct. 10 from the Pacific Northwest, the official said.