April 13, 2009

Soybean prices could remain well-supported as Chinese demand remains firm.

Unlike previous years, Chinese traders are buying good quantities of U.S. soybeans, even though South American beans, which are usually at a discount to U.S. prices, have hit the market.

South America's drought-affected soybean crop and ongoing tax disputes between the Argentine government and farmers have meant that Chinese don't want to cut off buying from the U.S.

Last week, Chinese companies booked 238,000 metric tonnes of U.S. soybeans compared with 57,000 tonnes in the preceding week.

According to U.S.-based grains analyst Tim Hannagan, soybean futures on the Chicago Board of Trade could turn up or down in this week's trade, depending on weather conditions in the U.S.

While wet weather could delay planting of soybeans in the U.S., likely driving the May soybean contract to US$10.50 a bushel, drier weather could bring prices to the US$9.70/bushel level, Hannagan said.

At 0625 GMT, CBOT May soybeans were at US$10.13/bushel, up 5.6 cents from Thursday's U.S. pit-trading close.

Turning to wheat, Pakistan's gross domestic product could be hit as the country's expected wheat output is likely to be lower than earlier estimates, according to Pakistan's Daily Times.

The newspaper said that while the government had expected the wheat crop, currently being harvested, to be around 25 million tonnes, actual output could be around 23.3 million tonnes.

Wheat is Pakistan's staple crop. A lower wheat crop in Pakistan could be bullish news for global wheat prices, since the country was among the leading wheat importers last year.