March 15, 2006

 

Asia Soybean Outlook: Demand may remain flat on prices

 

 

Asian demand for soybeans is unlikely to rise much in the week ahead, as an expected sharp fall in South American soybean prices hasn't yet materialized.

 

Chinese buyers are still among the most active Asian soybean importers, buying both U.S. and South American beans.

 

"Over the last few days, around three handy-sized cargoes of soybeans may have been imported by Chinese buyers," said a trader in Shanghai.

 

The trader added that the premium for soybeans shipped from Brazil to China was unchanged over the week, at around 105 U.S. cents a bushel over the CBOT July contract, while Chinese buyers are expecting premiums to fall to below 100 cents.

 

Every year, April and May shipments of soybeans from Brazil become much cheaper than U.S.-origin soybeans. But so far this year, a strong Brazilian real has prevented South American soybean prices from falling sharply and has kept U.S. soybeans competitive.

 

Traders in the U.S. said Chicago Board of Trade soybean futures may slide over the next several days, as concern over bird flu and expectations of a good South American soybean harvest loom large.

 

In Japan, traders said soybean imports have been rather slow, with no more than one cargo being imported in a week.

 

"Japanese soybean crushing has fallen by around 25% over the last two years as more consumers switch over to canola oil from soybean oil. So soybean imports are not really picking up," said a trader with a Tokyo-based brokerage.

 

He said at present, most importers are not finding much price difference between U.S. and South American soybeans.

 

"U.S. soybean prices are quite competitive at present compared with South American soybeans. Besides, freight cost from the U.S. Gulf to Japan is still working out much cheaper than freight from Brazil or Argentina," added the trader.

 

Meanwhile, Japanese traders continue to briskly buy Indian and Brazilian origin soymeal, as demand remains robust.

 

In other news, soybean prices in China's local markets continue to fall as buyers remain cautious because of continued fears over bird flu.

 

Chinese farmers are, however, keen on liquidating their soybean stocks because they want to earn cash before the spring seeding season.

 

In major deals this week, Taiwan's Breakfast Soybean Procurement Association, or BSPA, bought 60,000 metric tonnes of Brazil-origin soybeans from trading house Marubeni in a tender concluded Tuesday.

 

Last week, South Korea's Nonghyup Feed Inc., or NOFI, bought 52,500 tonnes of South American-origin soymeal in a tender.

 

Over the weekend, an Indian soybean trader sold about 5,000 tonnes of soymeal to a buyer in Thailand at US$218 a tonne, cost and freight, a senior industry official said, without naming either the buyer or the seller.

 

Asian buyers said Indian soymeal exports are expected to fall over the next few months as the new soybean crop harvest picks up pace in Brazil and Argentina.

 

"A back-of-the-envelope calculation suggests Argentine soymeal shipped to South Korea is around US$5-US$10/tonne cheaper than Indian soymeal," said a manager with a major South Korean feed buying group.

 

According to the latest industry data, India exported 2.1 million tonnes of soymeal in the five months to February, up from 933,270 tonnes in the year-earlier period.

 

However, local soymeal demand in India may continue to remain low, as a fresh outbreak of bird flu was reported in western India over the week.

 

The first outbreak of bird flu in India was reported Feb. 18.