April 26, 2006

 

Asian soybean imports may slow down in week ahead, traders say

 

 

Asian soybean imports may slow down in the week ahead as China, the world's largest importer of soybeans, is expected to cut down on purchases.

 

"Chinese buyers have imported a lot of soybeans over the last several weeks and now the domestic market is flooded with supplies," said a trader with one of China's biggest grains trading companies based in Beijing.

 

The trader said Chinese soybean importers are now buying a lesser amount of soybeans from South America and the US.

 

"Over the past week, I heard of only one or two cargoes being imported by Chinese buyers," the trader added.

 

However, analysts expect overall Chinese soybean imports to hit 3 million tonnes this month, which may be the highest monthly import amount so far in 2006.

 

Meanwhile, an industry news source reported that China imported 293,000 tonnes of soymeal from India during the January-March period and may purchase a total of  550,000-600,000 tonnes of Indian soymeal for the January-May period.

 

China boosted its soymeal imports from India in recent months, most likely because of the cheaper price. China has a massive domestic soybean crushing capacity and does not have significant amounts of soymeal imports. 

 

In China's local markets, soybean prices continue to fall as crushers continued cutting their offer prices, analysts said.

 

According to analysts, because soymeal prices are falling, crushers can only chose to lower their costs and keep their offer price for soybeans as low as possible.

 

Although current soybean prices in China are already lower than the growing cost, some farmers are still selling soybeans, since many of them urgently need money to buy equipment necessary for spring plowing.

 

The premium for soybeans delivered to China from Brazil is around 130 U.S. cents/bushel above the Chicago Board of Trade July contract, unchanged from last Wednesday.

 

Also, premiums of soybeans delivered to Asia may rise in the week ahead, as CBOT soy futures ended the last two sessions this week higher.

 

Analysts said lower canola planting in Canada (a competing oilseed crop), as well as indications that some farmers in the US may increase corn planting at the expense of soybean acreage, may keep CBOT soybean futures well supported.

 

In other news, India's soybean output in 2006 may be hit, if the India Meteorological Department's forecast of below normal monsoon rains this week proves correct.

 

India's soybean crop, which will be planted in June, depends critically on the June-September monsoon rains for sustenance. Soy is one of India's biggest oilseeds crops.