February 10, 2010


Asia Grain Outlook on Wednesday: Soy likely sideways; China demand, big crop



Soy are likely to continue trading in range, as strong Chinese demand is offset by supply expected from a big South American crop, analysts said Wednesday.


"The latest data indicate China is still buying aggressively, but the support is being mitigated by a strong dollar and a huge South American crop," said a trader at a commodities trading house.


China imported 4.08 million metric tonnes of soy in January, up 35% from a year earlier, the General Administration of Customs said Wednesday. In December, imports hit a record of 4.78 million tonnes.


The China National Grain and Oils Information Center raised its forecast for imports in the 2009-10 crop year that started Oct. 1 by 2 million tonnes to 42 million tonnes in a report issued Wednesday. The world's largest soy importer purchased 41 million tonnes in 2008-09.


"As a jump in soy output in South America this year is almost certain, China is expected to buy more from there in the second quarter, compared with the same time last year," the CNGOIC said.


The U.S. Department of Agriculture said Tuesday that it projects 2009-10 U.S. soy ending stocks at 210 million bushels, down 35 million from its January estimate of 245 million. The soy export projection was raised 25 million bushels to 1.400 billion bushels.


The USDA projected Brazil's soy production at 66 million tonnes, up 1 million tonnes from last month's estimate due to higher yields.


Benchmark March soy futures traded on the Chicago Board of Trade ended 0.54% lower at US$9.24 1/2 Tuesday. It was up 0.2% at US$9.26/bushel at 0732 GMT.


"Barring any dramatic change in the weather in South America, or drastic volatility in the U.S. dollar, soy are likely to stay in consolidation mode," the trader said.

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