August 16, 2006

 

Asia Soybean Outlook: Premiums may swing either way

 

 

Premiums for soybeans delivered to Asia may swing either way in the week ahead, as demand for U.S. soybeans remains good while the upcoming harvest is expected to be a bumper one.

 

Over the past few sessions, Chicago Board of Trade soybean futures put up a mixed performance.

 

In Asia, Chinese traders show no signs of importing more anytime soon, as domestic soybean demand remains slack.

 

According to the Beijing-based manager of a prominent grains trading company, very few vessels were booked in the past week.

 

"I don't see any sudden increase in Chinese soybean demand in the next one-to-two months," said the official.

 

At present, the premium for Argentine soybeans delivered to China is around 155 U.S. cents a bushel over the CBOT November contract, unchanged from last Wednesday.

 

Meantime, traders also say there is some firming up of ocean freight costs, though not to any great extent.

 

At present, the spot ocean freight cost for a panamax-sized cargo from South America to China is US$49/tonne.

 

While most Chinese buyers are still buying more South American soybeans than U.S. sorts, increasingly U.S. soybeans are getting more competitive in pricing, which may lead to Chinese increasing their U.S. soybean buying, a U.S.-based analyst said.

 

According to China's General Administration of Customs, July soybean imports by China totaled 90,000 tonnes. The customs department didn't give any on-year comparisons.

 

Interestingly, sentiment among China's grain traders was mostly more positive in the week to Wednesday, according to a weekly survey by China National Grains and Oils Information Center issued Friday.

 

Traders were moderately more bullish about soybean demand as overstocking continued to ease, the government-backed think-tank said.

 

The survey showed traders believed demand for soymeal was on track for recovery, as prices for pork and poultry were on an upward trend, the CNGOIC said.

 

In China's local markets, soybean prices continued to rise as demand showed signs of recovery.

 

Traders said local crushers stepped up purchases of soybeans in a bid to enhance production to meet increasing demand for soymeal and soyoil.

 

Elsewhere in Asia, Taiwan Sugar Corp. bought 12,000 metric tonnes of U.S.-origin soybeans in a tender last week from trading house Marubeni. The soybeans are for September delivery.

 

In India, sowing of soybeans, one of the major summer-sown oilseed crops, is progressing well, Rajesh Agrawal, chairman of the Soybean Processors Association of India, or SOPA, told Dow Jones Newswires.

 

"Now sunny weather is required for flowering of the crop followed by another spell of good rains after two or three weeks, and if this happens production may hopefully rise on year," Agrawal said.

 

According to industry estimates, India produced 6.5 million tonnes of soybeans in 2005.

 

Agrawal dispelled fears that excessive rains may have damaged the soybean crop in the western Maharashtra province.

 

"Apprehension of soybeans getting damaged due to excess rains is misplaced. It is a sturdy crop and falls into trouble only if there is excessive water-logging for a long time," said Agrawal.