September 27, 2006

 

Asia Soybean Outlook: Premiums stable; demand sluggish

 

 

Premiums for soybeans delivered to Asia will maintain unchanged in the week ahead, with demand expected to fall due to the week-long National Day holidays, while soybean futures price on Chicago Board of Trading will probably fluctuate around the current level, despite support from concerns of harvest slowdowns, analysts said.

 

The U.S. Department of Agriculture said Sept. 21 that net sales to China climbed to 326,200 metric tonnes in the week ended Sept. 14, up from 311,000 tonnes a week earlier.

 

Private exporters reported the sale of 110,000 metric tonnes of U.S. soybeans to China for delivery in the 2006-07 marketing year, according to the USDA Tuesday.

 

Premiums for soybeans delivered to China from the U.S. will hold stable next week, while demand is expected to decline due to the week long National Day holidays, said an analyst with commodities analysis firm JC Intelligence Shanghai.

 

"Premiums are around 195 U.S. cents a bushel above CBOT's November contract today, almost unchanged from last Wednesday," the analyst said. "Importers booked 3 cargoes of soybeans last week and 4 for this week."

 

Freight costs for the U.S. Gulf/China route fell slightly to around US$50-US$51/tonne this week, as demand dropped a little bid, she said.

 

Prices for soybeans imported from the U.S. were quoted around RMB2,600-RMB2,650/tonne this week, largely the same from a week earlier, traders said.

 

In local markets, buying demand was thin because of maintenance at crushers, while harvesting was delayed by inclement weather, analysts said.

 

"In recent days, crushing companies in major soybean producing regions reduced production for inspections and repairs and made few purchases," said Zhang Liwei, an analyst at China National Grain & Oils Information Center.

 

"New harvest of soybeans has been delayed by around 10 days, due to early frosts and low temperature conditions witnessed in producing regions lately," he added.

 

Harvesting of the autumn crop usually begins in late October.

 

Demand will continue to decline, with the National Day holidays of Oct. 1-7 on the horizon, local traders said.

 

Nevertheless, demand will be on the path to recovery in the fourth quarter, the Shanghai-based analyst said.

 

"After the National Days holidays, feed companies will increase production to meet growing demand from livestock farmers," she said. "Consumption of pork and poultry products will pick up steadily in the last three months of this year."

 

Import arrivals at Chinese ports will total around 1.7 million-1.8 million tonnes in September and rise to around 2.5 million tonnes in October, with demand recovering, analysts said.

 

In other markets, South Korean grain importers are likely to hold back ahead of the holidays next week, traders said Tuesday.

 

India's soymeal exports to China may reach 1.0 million metric tonnes in the marketing year to September 2007 from 700,000 tonnes in 2005-06, Davish Jain, Chairman of the Central Organization For Oil Industry and Trade, said Friday.

 

Japan's imports of soybean will probably fall to around 3 million tonnes this year from 3.5 million-3.6 million tonnes in 2005, as crushers' production keeps shrinking on high costs, trader with Sumitomo Corp., based in China, said Wednesday.