December 6, 2006

 

Asia Soybean Outlook: Premiums may rise on U.S. strength

 

 

Premiums for soybeans delivered to Asia are likely to rise in the week ahead as demand for U.S. soybeans remains buoyant while a rise in the prices of corn futures is also seen as supportive for soybean futures.

 

Soybean imports by the world's largest soybean importer, China, are likely to remain sluggish for the next two weeks, traders said.

 

Traders said that China's traders are wary of high Chicago Board of Trade futures and would rather wait a while before picking up their imports.

 

A trader in a Beijing-based state-owned grains trading firm said that since domestic soybean arrivals were also quite high in Chinese markets right now, imports have been sluggish.

 

However, he said that the domestic soybean crop will be absorbed very soon, as demand remains quite robust in China.

 

Traders said that stocks of soybean in Chinese ports have already started thinning.

 

They added that Chinese importers may pick up the pace of importing soybeans by the end of December for January and February shipments.

 

Some Chinese traders are also concerned by the rise in Brazilian soybean premiums over the past seven days.

 

At present, the premium for soybeans delivered to China from Brazil is 140 cents/bushel to the CBOT May contract compared with 135 cents/bushel last Wednesday.

 

Meantime, analysts are predicting that China's import arrivals in December will be about 2.2 million metric tonnes.

 

China's soybean crushers are faced with two contrasting trends, said commodities analysis firm JCI Shanghai. While soymeal demand is quite sluggish at present, soy oil demand is buoyant.

 

As a result, many crushers are still holding large inventories of soymeal which they have been unable to sell due to weak demand from the poultry and hog sectors, JCI said.

 

However, falling soy oil imports and a sharp rise in demand for soy oil from consumers has led to increased demand and rise in soy oil prices.