August 23, 2006

 

Asia Soybean Outlook: Steady premiums expected this week

 

 

Premiums for soybeans delivered to Asia are expected to hover around current levels in the week ahead, as Chicago Board of Trade soybean futures seem likely to trade in tight ranges.

 

While the U.S. soybean crop is in good shape, which may pressure futures, CBOT's Web site said soybean futures already seem quite oversold, which may restrict losses.

 

In Asia, an analyst with JC Intelligence Shanghai said Chinese soybean imports had improved over the past week, after remaining sluggish for the last several weeks.

 

The analyst said Chinese importers may have booked up to 6-9 cargos of U.S. origin soybeans in the last week, compared with an average of 2-3 cargoes in the last several weeks.

 

Analysts said that as the U.S. soybean harvest picks up pace in September, Chinese buying will gradually increase and probably reach fairly high volumes by October.

 

Meanwhile, another analyst at a Chinese grain buying firm said premiums for soybeans delivered to China from the Pacific Northwest are also rising, largely because of higher soybean prices in the U.S.

 

He said the current premium for soybeans delivered to China from the U.S. was around 180 U.S. cents a bushel above CBOT's November contract.

 

However, the ocean freight cost for the Pacific Northwest to China route is largely stable, around US$30/tonne.

 

Chinese analysts expect August import arrivals of soybeans to be around 2 million tonnes.

 

In China's local markets, soybean prices continue to rise moderately, supported by gains in the futures market and a recovery in feed demand.

 

Feed demand in China is rising as livestock producers are increasing livestock output with an eye to take advantage of rising pork and poultry prices.

 

Sentiment among China's grain traders was also mostly more optimistic about soybean demand in the week to last Wednesday, according to a weekly survey by China National Grains and Oils Information Center released Friday.

 

Traders have became more positive about the rise in demand for soybeans because crushing companies may purchase more soybeans because profits have picked up recently, the government-backed think-tank said.

 

In other news, Taiwan Sugar Corp. bought 12,000 tonnes of U.S.-origin soybeans from trading house Marubeni this week.

 

At present, the premium for soybeans delivered to Taiwan from the U.S. is around 207.75 U.S. cents/bushel above the CBOT November contract.

 

In India, soybean sowing is moving at a fast pace, with the area covered in the June 1-Aug. 18 period estimated at 7.9 million hectares, up from 7.6 million hectares during the same period last year.

 

However, overall area sown to oilseeds in India in the period is lower by 1 million hectares on year at 15.2 million hectares, mainly because of less area planted to peanut crop.

 

India's major summer-sown oilseeds crops comprise soybeans, peanuts and sunflowerseed. The oilseeds crop is sown from June to August and harvested in September and October.