February 16, 2009

Soybean prices are likely to rise further in the next few days, with Chinese demand still robust and continued concern over dry weather for the South American crop.

While Chinese buyers generally stop purchasing U.S. soybeans from late January, instead booking new crop soybeans in Brazil and Argentina, drought concerns for the South American crop have kept Chinese demand for U.S. soybeans high.

"There appears to be no reasonable seasonal slowdown in (Chinese) demand," said Tim Hannagan, analyst with U.S.-based commodities brokerage Alaron.

Last week, China bought about 724,000 tonnes of soybeans from the U.S.

In other grains, analysts said wheat prices may begin bottoming out, as Chicago Board of Trade wheat prices have fallen much more sharply than cash wheat prices and may therefore correct upward in the next few months to bring about a convergence of prices.

Besides, analysts said lower ocean freight cost is encouraging buyers to stock up on wheat and other grains.

South Korean buyers, for one, have been aggressively stocking up on corn, with a flurry of tenders and private deals last week.

On Thursday alone, a total of 275,000 tonnes of U.S. and South American corn was picked up by various South Korean feed buying groups and feed companies.

The Korea Feed Association has also bought 110,000 tonnes of soymeal.

Philippine feedmillers are also planning to buy 62,500 tonnes of corn, most likely from Thailand, to ease domestic supply concerns.