January 11, 2006

 

Asia Soybean Outlook: Premiums may fall on US futures

 

 

Premiums for soybeans delivered to Asia may fall in the week ahead, largely tracking a weak tonnee in U.S. futures, despite rapidly improving Chinese demand for the soy complex.

 

U.S. futures rose as the week to Tuesday began but have faltered since Jan. 5 as bird flu-related deaths in Turkey and improving weather in Argentina and Brazil encouraged sellers.

 

Analysts expect a weakness in fundamentals to persist in soybean futures, which could drag down soybean futures more in the coming days.

 

Meanwhile, China ended 2005 soybean imports on a strong note, with December imports at 2.61 million metric tonnes, compared with 2.55 million tonnes in November.

 

Overall, China's soybean imports surged 31.4% in 2005 to 26.59 million tonnes, clearly indicating bird flu concerns didn't have any substantial impact on soybean demand for China.

 

According to analysts, China's 2006 soybean imports may hit as high as 28 million tonnes, mainly because of increasing feed demand in China as the swine population grows and aquaculture expands.

 

Soybean prices in major Chinese soybean-producing regions rose last week, buoyed by rising soymeal prices as fewer bird flu cases were reported in the past month.

 

In addition, farmers were reluctant to sell as they anticipated higher prices - based on the uptrend in both the spot and futures markets - pushing the market even higher, traders said.

 

In Harbin, the capital city of Heilongjiang province - China's largest soybean-producing region - prices of average quality soybeans were around CNY2,520 a metric tonne Jan. 6, up CNY60 from a week earlier.

 

Meanwhile, the American Soybean Association has forecast China will probably surpass India as the world's largest edible oil importer in two years if India continues to have bumper oilseeds harvests, like in 2005.

 

There were no major deals in soymeal in either South Korea and Taiwan this week, as both countries are amply stocked for the first quarter of 2006.

 

Meantime, a recent report by the U.S. Department of Agriculture has said Vietnam's soybean production may not increase fast enough in the near future because of low yields and a lack of large-scale industrial crushing facilities.

 

It added that the cost of imported soybeans in Vietnam is around $400-410/tonne while domestic soybeans are available only around $440-472/tonne.

 

The report said that unless Vietnam raises high import tariffs, it will remain a major importer of soymeal and soyoil.

 

In 2005, Vietnam imported an estimated 1.1 million tonnes of soymeal and around 87,500 tonnes of soyoil.

 

Meantime, India's December soymeal exports in December rose to 492,950 tonnes from 303,750 tonnes in the year-earlier month, the Solvent Extractors' Association said.

 

Soymeal exports increased due to an improvement in soybean crushing margins in India, which led to more soymeal output, the association said.