January 4, 2006

 

Asia Soybean Outlook: Premiums may rise on US futures

 

 

Premiums of soybean delivered to Asia may rise amid continued expectations of gains in U.S. futures and Chinese buying.

 

Analysts said the rally in U.S. soybean futures over the last two working days may persist through the week as index funds could keep buying, while heat and dryness in Argentina's soybean-growing regions may provide further support.

 

Soybean demand from China is still going strong, with the country's feed consumption continuing to recover as bird flu fears recede.

 

According to Chinese analysts, demand for soymeal is improving as some feed mills are buying in anticipation of greater poultry demand during the start of the Lunar New Year later this month.

 

Traders said demand for the soy complex may peak in the two weeks before the Lunar New Year.

 

"Traders believe that China will continue to book U.S. soybeans this week," said the cbot.com, in its analysis of Tuesday's soybean futures movement.

 

However, the Chinese government reported Wednesday that an outbreak of bird flu Dec. 22 killed 1,800 poultry in Sichuan province.

 

Whether the current outbreak will rekindle bird flu fears among Chinese poultry consumers will only be clear over the next several days.

 

Soybean prices in China's major soybean-producing regions were steady in the week to Friday.

 

In Harbin, the capital of Heilongjiang province, China's largest soybean-producing region, prices of average quality soybeans were quoted around RMB2,420 a metric tonne, unchanged from the previous week.

 

Indian Soymeal Gains Favor With Asian Buyers

 

Meanwhile, soymeal imports in Taiwan and South Korea continued to remain lackluster with no significant deals likely over the week.

 

Most buyers in these countries have already covered their soymeal needs and may not return to the market any time soon.

 

There was only one major soymeal deal in the week to Wednesday.

 

South Korea's Nonghyup Feed Inc, or NOFI, bought 30,000 tonnes of Indian soymeal from trading house Majuko in a tender concluded Tuesday. NOFI bought the cargo for $240.80/tonne, cost and freight, to be delivered May 10.

 

A Seoul-based trader said Indian soymeal is the current favorite of Asian buyers because of its significant price advantage compared with Argentinean or Brazilian soymeal.

 

The trader said that while good-quality Indian soymeal is available at around $240/tonne, cost and freight, to most Asian destinations, the cheapest South American variety of soymeal is available only at around $245/tonne.

 

China bought around 36,000 tonnes of Indian soymeal last week, and more purchases seem likely.

 

"We expect Chinese soymeal imports from India to reach around 150,000 tonnes in the October 2005-February 2006 period," said Hamburg-based trade magazine Oil World.

 

It didn't say how much sales have already taken place since October.

 

Meanwhile, the Associated Press reported last week that Iowa Soybean Association directors visited Indonesia and Philippines recently to meet buyers, as they wish to increase market share in these countries.

 

But the report said pricing remains a key challenge for U.S. soybean producers in these markets.

 

"They all want cheap soymeal and soybeans, but they also want high quality. They have to realize that high quality beans like those grown here in Iowa don't come at a cheap price, but that they're worth every penny," AP quoted Curt Sindergard, Iowa Soybean Association director as saying.