July 1, 2009
Asia Grain Outlook on Wednesday: Soy up; market focus on China reserves
Soy prices in Asia are likely to continue their uptrend in the coming sessions, though the key market focus will remain on the timing of the release of China's soy reserves and any potential slowdown in the pace of China's soy imports, analysts said Wednesday.
Chicago Board of Trade soy futures settled mostly lower Tuesday but staged a strong rebound in Asian trading Wednesday as the market continued to focus primarily on tight U.S. old crop supply, observers said. At 0710 GMT, e-CBOT's July corn contract was trading 2.10 U.S. cents higher at US$12.48 a bushel
The much anticipated USDA acreage report, released Tuesday, forecast U.S. 2009-10 soy-planted acreage at 77.483 million acres - below the average analyst estimate of 78.305 million - while harvested area is forecast at 76.5 million acres, up 3% from 2008, and will be the largest harvested area on record if realized.
The figure is up from the USDA's March 31 planting estimate of 76.024 million acres, the report said.
U.S. soy planted acreage was 75.718 million acres in 2008.
"Soy prices have performed strongly in 2009 so far, driven by old crop tightness, Argentinean supply downgrades, the strong pace of Chinese imports and low U.S. stocks for the 2008-09 crop, said Barclays Capital in a regular commodities report dated Tuesday.
Though the outlook for soy prices remains generally firm, there are lingering concerns surrounding China's massive state reserves, and traders said it's likely only a matter of time before China starts to offload its stocks.
China imported 3.52 million tonnes of soy in May, and recent forecasts suggest imports could reach 4.3 million tonnes in June.
"Over the coming months, key price drivers will be the timing of the release of Chinese soy reserves, which is likely to dampen prices temporarily, and a slackening in the pace of Chinese imports. (However,) we remain positive on prices, which, in our view, are likely to be supported by a pick-up in demand and relatively low stocks," BarCap said.
In other regional grains news, Japan's Ministry of Agriculture, Forestry and Fisheries said Tuesday it is seeking 108,000 tonnes of U.S. and Australian-origin wheat in a tender to be concluded Thursday.
Meanwhile, the Taiwan Flour Mills Association will tender for 82,350 tonnes of U.S. wheat around noon local time (0400 GMT) Thursday, with the tender likely to be concluded around 2 p.m. (0600 GMT), a trader with the company said Tuesday.
