November 22, 2006

 

Asia Soybean Outlook: Premiums may rise on CBOT gains

 

 

Premiums of soybeans delivered to Asia may rise in the week ahead, as Chicago Board of Trade soybean futures continue to gain largely on technical strength.

 

In Asia, Chinese soybean imports remained moderate in the past few days.

 

Traders in Beijing said a few cargoes of South American soybean for April shipment were booked by soybean processors in China.

 

They said South American soybean premiums for April shipment were priced quite reasonably at a premium of around 120 U.S. cents/bushel to the CBOT May contract.

 

On the other hand, prompt shipments of U.S. soybeans were commanding much higher premiums of around 180 cents/bushel to the CBOT March contract.

 

Traders said the momentum of soybean imports by Chinese traders in the next few weeks will be decided by how international soybean prices compare with local prices.

 

They said that while domestic soybean stocks in China were quite ample, fresh domestic soybean arrivals in Chinese markets from the new crop being currently harvested are still quite modest and will remain so until the end of next month.

 

Slower arrival of domestic soybeans coupled with rising CBOT soy complex futures may lead to a further rise in domestic prices of soybeans, soy oil and soymeal in China in the next several weeks, prompting traders to step up imports.

 

Soybean arrivals in Chinese ports could be between 2.3 million-2.5 million metric toones each for November and December.

 

In China's local markets, soybean prices have started showing significant gains since Nov. 15 as soybean processors buy large quantities of soybean buoyed by higher demand for soymeal and soy oil, said commodities analysis firm, JCI Shanghai.

 

In north China local soybean is selling at RMB2,550/toone, while imported soybean is around RMB2,650/toone.

 

But even as soybean prices are gaining in local markets, many farmers are holding on to their soybean stocks, expecting prices to go up even further.

 

In Japan, traders said soybean imports have been going on at an even pace over the last few weeks and traders are unlikely to either increase or decrease their import commitments much in the remaining months of the year.

 

Traders said that Japan may import around 4.1 million toones of soybean in 2006, slightly higher than 4 million toones imported in 2005.

 

Meantime, the premium for soybeans delivered to Japan from the U.S. remains unchanged from last Wednesday, at 60 U.S. cents/bushel above the CBOT January contract, for January shipments.