December 10, 2008
Soybean prices may be well-supported in the next few days on continuing Chinese imports.
According to Tim Hannagan, a U.S.-based analyst with Alaron Commodities, the demand for U.S. soybean is continuing to build up and is higher compared with a year ago.
The U.S. is the only country exporting soybeans at present, with the South American crops likely to come into the market in late January.
Hannagan said a risk with Chinese purchases is the history of cancelations once the South American crop comes into play.
"China then begins to buy Brazilian beans for April on out shipment and cancels the U.S. purchases from December," said Hannagan.
Meantime, the U.S. Department of Agriculture's U.S. crop report is likely to come out Thursday, which may provide the grains market cues for price direction.
But analysts said no sustained rally in corn or soybeans is possible unless crude oil recovers, and that doesn't seem to be on the horizon.
On corn, Hannagan said despite falling prices importers seem to be holding out for lower prices, adding demand was unlikely to recover unless Chicago Board of Trade corn futures hit a bottom and there's a short-covering rally.
In Wednesday's electronic trade, both corn and soybean futures were trading higher, in line with Asian equity markets.
At 0557 GMT, the December corn contract was trading 5.6 U.S. cents higher than Tuesday's pit-trade closing, at US$3.33 a bushel, while the January soybean contract was trading 11.4 cents higher at US$8.24 a bushel.
In other news, analysts and rice millers said global rice prices are unlikely to rebound in 2008, as Asian countries will carry over substantial stocks from this year's good paddy harvests, adding the import demand may be sluggish due to the financial crisis hitting purchasing power, especially in developing countries.
However, the analysts also said if India doesn't lift its ban on non-basmati rice exports by the second quarter of 2009, as widely expected, it could pressure global rice supplies and lead to some recovery in prices. The ban has been in place since March.