October 25, 2006

 

Asia Soybean Outlook: Premiums may rise; freight cost, CBOT

 

 

Premiums for soybean delivered to Asia may continue to gain in the week ahead on higher ocean freight costs and expectations of continued gains in soybean futures on the Chicago Board of Trade.

 

CBOT soybean futures have ended mostly higher the last few sessions, backed by technical strength, strong export demand for U.S. soybean and rising corn and wheat futures.

 

Ocean freight costs are expected to remain firm in the short term on increased global traffic of coal and iron ore.

 

China, the world's largest soybean importer, didn't import much soybean the past week.

 

A trader at a Beijing-based grains trading firm said Chinese importers booked no more than two cargoes of soybeans the past seven days.

 

"Since soybean futures are soaring and freight cost too is quite firm, I don't think Chinese importers will be very active in the market for at least the next two weeks," the trader said.

 

Premiums for soybean delivered to China from the U.S. are around 170 U.S. cents a bushel above the CBOT January contract.

 

Some Chinese analysts expect soybean import arrivals to rise in November, with total arrivals likely to be around 2.4 million tonnes.

 

However, as the soybean harvest in China continues, many crushers in the soybean-growing regions in the north and northeast may buy more local soybean when the new harvest comes to the market in November.

 

Local soybean prices could drop RMB100-RMB200 a metric tonne upon the arrival of the new harvest in the market, local traders said.

 

In the longer term, China's soybean demand may continue to grow 8%-10% annually over the next three to five years, making soybean crushing a lucrative long-term business prospect, Ricardo Leiman, chief operating officer of Hong Kong-based commodities trading company Noble Group, told Dow Jones Newswires.

 

He said soybean sales will rise as Chinese consumers improve their dietary intake and protein consumption.

 

In other news, India's federal government raised its 2006 output estimate for soybean to 7.84 million tonnes from 7.54 million tonnes estimated in September.

 

India's soybean crop, sown from June to August, was harvested in September and October.

 

India's edible oil mills, however, will independently release their output estimates of India's summer-sown crops, such as soybean and groundnut, on Nov. 5 at an industry conference in the southern city of Chennai.

 

The initial estimate of edible oil mills in September put the 2006 soybean output at 7 million tonnes.

 

Meantime, the Kaohsiung branch of Taiwan's Breakfast Soybean Procurement Association, or BSPA, is seeking 27,000-60,000 tonnes of U.S. or Brazil-origin soybeans in a tender to be concluded later Wednesday.

 

If the soybeans are to be shipped from the U.S. Gulf or Brazil, they should reach South Korea Nov. 25-Dec. 9. If they are shipped from the Pacific Northwest, they should reach South Korea Dec. 10-24.