August 27, 2007

 

Asia Grain Outlook on Monday: Soybean import prices may rise; US floods

 

 

Prices of soybeans imported to Asia may rise in the week ahead, led by expected gains in Chicago Board of Trade soybean futures following unfavorable weather during the ongoing soybean sowing season in the U.S.

 

CBOT soybean futures have been rising over the past two sessions, as a large portion of the main Midwest soybean belt remains flooded, and this has created an uncertain outlook for production and crop yield for the new soybean crop.

 

In addition, soybean planting in the U.S. for the 2007-08 crop year has fallen sharply from last year, because many soybean farmers have switched to planting corn, encouraged by higher corn prices due to demand for ethanol and biofuel.

 

Corn and soybean futures prices on CBOT usually move in tandem, but corn futures haven't risen in the past two sessions despite soybean gains and flooding in the Midwest, as early harvesting in some U.S. corn growing areas pressured prices. This week, it's difficult to predict whether corn will follow soybean in posting gains on the CBOT.

 

Over in Asia, demand for imported soybeans remains strong in China, but the country's imports could fall this week if CBOT soybean futures continue to strengthen.

 

Last week, gains in CBOT soybean futures pushed China's soybean import prices higher, as most of its imports are from the U.S. As such, China's soybean import volume fell to six to eight cargoes last week, from around 13 cargoes in the preceding week.

 

Currently, Chinese buyers are paying a premium of 265-280 U.S. cents/bushel to the CBOT November contract for October delivery to China, up from 215-260 cents/bushel to the CBOT November contract in the preceding week.

 

In other news, Japan's Ministry of Agriculture will increase the price at which it sells imported wheat to flour millers by 10% effective Oct. 1, a ministry official said last week, but didn't provide a reason.

 

The average price of wheat sold to millers will rise to Y53,270 a metric tonne from Oct. 1, from Y48,430/tonne.

 

The price hike is due to rising Chicago Board of Trade wheat futures, which hit an 11-year high earlier this month, trade officials said.

 

Japan's federal government procures most of its wheat through imports from the U.S., Canada and Australia, and private traders aren't allowed to import wheat.