March 1, 2006

 

Asia Soybean Outlook: Premiums may fall on US futures

 

 

Premiums of soybeans delivered to Asia may fall in the week ahead, as U.S. soybean futures are likely to remain pressured by growing bird flu concerns across the world and an expected bumper global soybean harvest.

 

U.S. soybean futures were mixed in the week to Wednesday, with gains over the last three trading days and losses in the preceding three days.

 

In addition, the discovery of the deadly H5N1 disease in previously bird-flu-free countries such as France and India are potentially damaging for global poultry and feed consumption, analysts said.

 

Besides, the world's three largest soy producers, Argentina, Brazil and the U.S., are likely to produce bumper soybean crops.

 

Soybean demand in Asia was thin this week, as traders are awaiting lower world prices.

 

There was only one major confirmed deal in the week to Wednesday - government-owned Taiwan Sugar Corp. bought 20,000 metric tonnes of U.S. No. 2 yellow soybeans.

 

The premium for soybeans shipped from the U.S. Gulf to Japan was quoted at 160 U.S. cents/bushel over CBOT May contract, higher than last week's 149 cents/bushel. The premium for soybeans shipped from Brazil to China was quoted around 160 cents/bushel over CBOT May contract, with no comparative prices available for last week. Japanese traders said while soybean buying has been subdued over the last few weeks, at least one major Japanese trading house is expected to buy four cargoes of Brazilian soybeans for April shipment in the week ahead.

 

"The Brazilian prices right now are pretty much the same as U.S. soybean prices," said one trader.

 

Soy oil consumption in Japan has been declining, as many people have switched to canola oil, which is perceived to be a healthy oil, the trader said.

 

In China, analysts said demand for soymeal is weak, and domestic prices are falling. Traders don't expect soymeal demand or prices to rise over the next few weeks.

 

Soybean demand in China remained sluggish as well, while prices were flat as crushers expect local soybean prices to fall sharply in March.

 

Chinese farmers are still holding on to half the total soybean output, and more supplies are expected to arrive on the market as farmers may sell stocks to raise money in preparation for spring seeding, analysts said.

 

From Feb. 1-20, 930,000 tonnes of soybeans arrived in China, COFCO Futures said. It revised its February import estimate to 1.3 million tonnes for February, down from a previous estimate of 1.5 million to 1.6 million tonnes.

 

In January, China imported 1.69 million metric tonnes of soybeans, down 8.9% on year, the General Administration of Customs said on its Web site last week, without providing any explanations for the change.