August 30, 2012

 

Thai feed mills buy one million tonnes soymeal

 

 

As Asian buyers resume purchases after staying away for more than two months, Thai feed mills have bought up to one million tonnes of soymeal in recent deals, while Vietnam is in the market to cover some 200,000 tonnes.

 

Asian feed grain importers have not been active in the market since June as benchmark Chicago corn and soy futures started climbing, fired up by a devastating drought that has scorched crops across the US grain belt.

 

India has signed its first new-crop soymeal deal with a sale of 25,000 tonnes to Europe, three traders told Reuters on the side lines of a regional grains conference in Phuket.

 

While Thai mills paid US$30-50 a tonne premium over Chicago Board of Trade futures for South American cargoes, Indian soymeal was sold at US$610 a tonne, free alongside ship.

 

"Initially some big players started buying soymeal in private tenders which triggered purchases by smaller mills as they didn't want to be left behind," said one of the traders who works at an international trading company.

 

"The demand seems to be picking up and we expect more deals in the coming weeks."

 

Taiwan bought 180,000 tonnes of US and South American soy after purchasing a similar volume last week, traders said. The Philippines booked more than 300,000 tonnes of soymeal from the US last week, he added. Most Thai deals have been signed in the last two weeks.

 

Asian buyers are likely to sign more deals with monsoon rains improving the outlook for India's soy crop and forecasts of a record-large output in Brazil next year as all-time high prices encourage farmers to plant more.

 

"It is a good time to lock in some supplies now as everyone is estimating good production in India and a record-high output in Brazil," said another trader. "Any problem with these crops will add fuel to the rally."

 

US corn futures have climbed 52% since the beginning of June, while soy has jumped nearly 36% as the worst drought in 56 years curbs yields in the US, the world's top exporter.

 

Wheat has surged about 33% with a Black Sea drought and poor rains in Australia adding to supply woes.

 

Vietnam is expected to book some 200,000 tonnes of soymeal for November and December arrival, while Indonesia is open for around 100,000 tonnes for the fourth quarter shipment.

 

"We expect Vietnam to buy Indian cargoes but it all depends on the prices," the third trader said. "Indian prices have started moving higher since the deal to ship soymeal to Europe and if it keeps going up, the demand will shift to South America," the trader said on the side lines of the conference.

 

The 9th Southeast Asia-US Agricultural Cooperators Conference -- organised by lobby groups the American Soy Association International Marketing, the US Grains Council and the US Wheat Associates -- brings together US exporters and Asian buyers.

 

Indian soymeal prices have risen to around US$645 a tonne, free on board, compared with US$690 a tonne, including cost and freight, being offered for South American cargoes.

 

This summer's historic drought has inflicted more damage to corn and soy crops around the US Midwest than the government is predicting, the Pro Farmer newsletter said last week after a tour of the grain belt.

 

It estimated US corn production at 10.478 billion bushels, based on a yield of 120.25 bushels per acre. That compares with the USDA's latest forecast of a 10.779 billion bushel crop on a yield of 123.4 bushels per acre.

 

Soy production was seen at 2.60 billion bushels on a yield of 34.8 bushels per acre. Earlier this month, the USDA pegged the soy harvest at 2.692 billion bushels and yield at 36.1 bushels per acre.