November 2, 2005

 

Asia Soybean Outlook: Premiums may fall; bird flu, US crop

 

 

Premiums of soybeans delivered to Asia may fall as demand remains sluggish due to bird flu concerns, traders said Wednesday.

 

Premiums are also pressured by the U.S. harvesting season as it draws nearer to a close, they added.

 

According to a USDA crop progress report Monday, 92% of the soybean crop has been harvested as of Sunday, up from last year's 83% and the five-year average of 86%.

 

"Expectations of a good U.S. soybean crop are certainly damping premiums," said a trader in Tokyo.

 

However, ocean freight rates may rise in November-to-February, largely on higher expected coal shipments during these winter months, bolstering premiums, traders said.

 

At present, panamax-size cargoes are being quoted at around US$50 a tonne on the benchmark route from the U.S. Gulf to Japan.

 

U.S. soybeans were quoted Wednesday at 200 U.S. cents a bushel over the Chicago Board of Trade January contract, cost and freight to Japan for December shipment.

 

In China, premiums remained depressed over the week on weaker demand for soy-based feed products.

 

However, one trader in Beijing said the medium-to-long term outlook for Chinese soymeal demand is still firm, as the poultry industry may turn around swiftly once the bird flu fears ease.

 

China has reported three bird flu outbreaks in poultry over the past month. No human cases have been reported.

 

China's disease control director Qi Xiaoqiu said in Washington Tuesday that with 20% of the world's domestic poultry population, his country understands that it must work hard to prevent bird flu from spreading around the globe.

 

U.S. soybeans were quoted Wednesday at 165 U.S. cents per bushel over the CBOT January contract, cost and freight to China for December shipment, the trader said.

 

China is the world's largest soybean buyer, and is estimated to have imported 25 million tonnes in the year ended Sept. 30.