January 19, 2009

Soybean prices may continue rising as analysts expect Chinese imports to accelerate ahead of the Chinese New Year holidays.

 

Tim Hannagan of the U.S.-based Alaron Securities said Chicago Board of Trade soybean futures could be supported by "aggressive Asian buying ahead of the Chinese New Year beginning the last week of January."

 

Chinese importers are also expected to keep buying U.S. soybeans through February, as continued dry weather in South America may reduce global availability of soybeans this year, he said.

 

Hannagan pegged technical support for CBOT March soybeans at US$9.80/bushel, with the next level of support at US$9.50/bushel, which could be targeted if Brazil receives some rainfall during the week. Technical resistance levels are pegged at US$10.50 and then US$10.90.

 

On Friday, CBOT March soybeans settled 25 1/2 cents higher at US$10.20. There will be no trading on Monday due to a holiday in the U.S.

 

According to a Commonwealth Bank of Australia report, there is some concern in the U.S. that soybean plantings may increase at the expense of corn planting this year, as soybean prices are rising on the back of South American weather concerns and Chinese buying.

 

However, Taiwan's soybean imports have slowed in the last few weeks, a Taipei-based industry official said.

 

He said imports were taking place at a fast clip until the end of 2008, but since then the pace has slowed.

 

"Taiwanese soybean processors currently have soybean stocks for 45 days," he said.

 

The official said that while in 2007 and 2008 most soybean imports were being brought into Taiwan in containers, the trend is now changing as bigger panamax vessels are now much cheaper than a few months ago.

 

In deal news, the Philippines is expected to import 1.5 million metric tonnes of rice from Vietnam in 2009 to meet a shortfall in domestic supply, farm secretary Arthur Yap said last week.

 

Traders in the Philippines said that the country might have already struck a deal with Vietnam to buy rice at US$380/tonne, on a cost and freight basis, though Yap didn't confirm this.

 

Vietnamese rice is currently more than US$200/tonne cheaper than Thai rice, making it much more competitive globally. Global rice prices may fall sharply in the near term if India decides to lift its ban on white rice exports in the next two months.

 

India banned white rice exports last March, but lower domestic prices and ample foodgrain stocks may lead to the lifting of the ban, government officials have indicated over the past several weeks.