November 1, 2006

 

Asia Soybean Outlook: Premiums may rise on CBOT gains

 

 

Premiums for soybean delivered to Asia may continue to rise in the week ahead as Chicago Board of Trade soybean futures are likely to keep rising.

 

CBOT soy futures are rising on strong U.S. soybean exports and are finding support from gains in corn and wheat futures.

 

In Asia, demand for soybean from China - the world's biggest soybean importer - remained modest over the past few weeks, with 5-7 cargoes of fresh soybean imports being booked by Chinese traders every week.

 

"Fresh soybean imports have been low in recent weeks largely because of the increase in CBOT soybean futures," said an analyst with commodities analysis firm, JCI Shanghai.

 

At present, most Chinese traders are booking import shipments for December arrival in China.

 

Traders said the premium for soybean delivered to China from the U.S. is currently around 182 U.S. cents/bushel to the CBOT January contract.

 

They added soybean imported at current levels of premium would translate to a price of RMB3,000 a metric tonne, when the imported soybean arrives in Chinese markets in December or January.

 

Imported soybean already in the Chinese market is selling at RMB2,750/tonne.

 

Analysts said that imported soybean arrivals in China is likely to be around 2.3 million tonnes in November, almost the same expected for October.

 

Last week, China's federal government said September soybean imports were 1.8 million tonnes, down 4.5% on year.

 

However, analysts in China said that overall demand for soybean and soymeal in China may rise in the coming months as livestock farmers are expected to increase production.

 

But they add that local soybean prices in China now seem firmly hinged to CBOT futures and rise and fall in tandem, as almost half of soymeal and soy oil manufactured in China is made from imported soybeans.

 

Meantime, India is again becoming active in soymeal exports, after a gap of a few months as the harvesting for soybean in the country is completed.

 

Vietnam, Philippines, Thailand, China, Taiwan and South Korea are some of the major Asian buyers of Indian soymeal.

 

In terms of price, a recent tender in South Korea showed that Indian soymeal is currently being offered at US$245/tonne-US$260/tonne on a cost and freight basis, which may be slightly lower than South American soymeal offers.

 

Moreover, Indian soymeal prices may fall further in the next six to seven weeks as more soybean arrives in the local Indian markets.

 

Rajesh Agrawala, president of the Soybean Processors Association of India, told Dow Jones Newswires that current daily arrivals of soybean in local markets is around 100,000 tonnes a day, which he considered quite high.

 

He said that soybean production in India, harvesting for which ended last month, is likely to be 7.2 million tonnes, same as in 2005.

 

However, he added that domestic soybean prices may be supported by the fact that soybean stocks in India at the beginning of the current oil marketing year were 200,000 tonnes on Nov. 1, which is 600,000 tonnes less than stocks on Nov. 1, 2005.

 

India's oil marketing year runs Nov. 1-Oct. 31.

 

In import deals this week, Cargill will supply 55,000 tonnes of India or South America-origin soymeal at US$247.99/tonne, to arrive on May 15, 2007, to Nonghyup Feed Inc. in a buy tender concluded Wednesday.