November 26, 2007
Asia Grain Outlook on Monday: Soybean prices likely to keep soaring
Asian soybean buyers are unlikely to get a break from soaring prices this week, on expected firmness in Chicago Board of Trade soybean futures.
On Friday, CBOT soybean futures touched a 34-year high on rising demand for soybean exports and firm crude oil futures.
At the heart of soybean's relentless gains in CBOT over the past few weeks has been China's sudden increase in soybean and soyoil imports, as the country grapples with a surge in edible oil prices. CBOT soybean futures show no signs of calming down even in e-CBOT trading so far Monday. At 0456 GMT, the CBOT January soybean contract was trading 9.4 cents higher at US$11.09 cents a bushel, while March was 9 cents higher at US$11.25 cents/bushel.
Analysts have been talking of CBOT soybeans likely peaking at US$12/bushel, but with strong demand for soybean and soyoil and the link soybean has formed with crude oil futures in the past several weeks, soybean prices may go even higher.
China's fresh soybean import bookings slowed down a bit in the week to Nov. 23, falling to nine to 11 cargoes from 14-16 cargoes in the preceding week, mostly because the Thanksgiving Holiday in the U.S. truncated the working week.
However, Chinese buyers are now mostly buying for March and April shipments, unlike in the past few weeks when a lot of soybeans was being bought for December and January.
Meantime, in a report Friday, commodities analysis firm Shanghai JCI said that while soybean prices in China's domestic markets continue to rise, the gains are slowing down as government seems keen on continued imports of soybeans and soyoil to tame rising edible oil prices.
However, since CBOT soybean futures are in such a bullish phase, any drop-off in Chinese local prices - where 80% soybeans used for crushing are imported - is not likely to be significant.
In the coming weeks, Chinese traders may be a little cautious in importing soybeans, as both domestic and international markets are volatile.
