November 15, 2006

 

Asia Soybean Outlook: Premiums may gain on CBOT strength

 

 

Premiums for soybeans delivered to Asia may continue to rise in the week ahead, as Chicago Board of Trade soybean futures look set to continue their gains.

 

According to U.S. analysts, market perception that soybeans have to rally in tandem with corn to secure adequate 2007 acreage in the U.S. may keep soybean futures well-supported.

 

In Asia, the world's biggest soybean importer - China - continued to buy small volumes of soybeans in the international markets.

 

"At the current high prices of CBOT futures, Chinese traders are not going to step up imports," said a trader with a Beijing-based grains trading firm.

 

Traders said that China has enough soybean stocks at present, while harvesting of its soybean crop is underway, all of which worked to keep fresh soybean imports by Chinese traders low.

 

They added that imported soybean is at least RMB150 a metric tonne higher than locally-available soybean.

 

The premium for soybean delivered to China from the U.S. is 180 U.S. cents/bushel above the Chicago Board of Trade March contract.

 

Traders expect November imported soybean arrivals in Chinese ports at 2.5 million tonnes.

 

China's soybean imports rose 9.7% on year in the January-to-October period to 23.5 million tonnes, the General Administration of Customs said last week.

 

In October alone, China's soybean imports were 2.25 million tonnes.

 

However, demand for soybean is rising in China's local markets as demand for soymeal and soy oil remains buoyant.

 

According to traders, better offtake of soymeal by animal feed producers and higher sales of soy oil have boosted the crushing margins for processing plants.

 

While no major soybean import deals from other Asian countries were reported in the last two days, Taiwan's Breakfast Soybean Procurement Association is expected to buy up to 60,000 tonnes of U.S. or South American soybean in a tender later Wednesday.

 

In Thailand, the government said it will allow animal feed and livestock associations to import unlimited amounts of soymeal from World Trade Organization member countries next year, the Bangkok Post reported Wednesday.

 

However, these associations must purchase soymeal from local vegetable oil refineries at THB9.85/kg to qualify for import permission.

 

The report didn't mention the import duty that will be levied on soymeal imports from WTO member nations.

 

The government also said that soymeal imported from countries in the Asean Free Trade Area will face a 5% import duty, while the tax will be waived for produce from Australia and New Zealand, which have free trade deals with Thailand.