November 9, 2005

 

Asia Soybean Outlook: Premiums may be unchanged; bird flu

 

 

Premiums of soybeans delivered to Asia are likely to remain unchanged as demand continues to be sluggish amid bird flu concerns, traders said Wednesday.

 

Spot ocean freight rates aren't expected to fluctuate sharply either, they added.

 

Concerns over the spread of bird flu are damping demand for soybean in Asia, especially in China.

 

The threat of bird flu may reduce demand for poultry products as well as soymeal, an important poultry feed component.

 

However, bird flu worries aren't likely to cause a sharp fall in China's soybean imports in the next few weeks, a Singapore-based trader said.

 

"Almost throughout 2005, we have seen Chinese traders being cautious about buying soybean, only importing enough to meet immediate demand," said the trader, adding that traders will continue to be cautious with their purchases.

 

U.S. soybeans were quoted Wednesday at 170 U.S cents per bushel over the Chicago Board of Trade January contract, cost and freight, to China, said traders.

 

Last week China reported its fourth outbreak of bird flu among fowl since October. It had earlier confirmed three outbreaks in Inner Mongolia, Anhui and Hunan provinces.

 

The latest outbreak killed 8,940 chickens in a village in northeastern Liaoning province and prompted authorities to destroy 369,900 other birds.

 

Many soybean crushers in China are keeping close watch on the emerging bird flu scenario, as concerns mount over its impact on soymeal consumption.

 

However, some analysts say the overall trend in Chinese local soybean prices in the long-term may reflect the rise in CBOT soybean futures.

 

On Friday, the reselling price for imported soybean was quoted around RMB2,700 a metric tonne in Qingdao, slightly higher than RMB2,680/tonne a week ago.

 

Soybean futures on CBOT posted modest gains Tuesday.

 

November soybeans ended 2 3/4 cents higher at US$5.74 1/4/bushel while January soybeans finished 2 1/2 cents higher at US$5.85 1/2/bushel.

 

Meantime, a Tokyo-based trader said soybean demand in Japan remains sluggish.

 

Local traders aren't expecting any major changes in premiums of soybean delivered from the U.S. to Japan, he added.

 

"Spot ocean freight rates for panamax-size cargoes are hovering around US$45-US$46/tonne, which is quite reasonable, and we expect freight rates to stay stable," said the trader.

 

India's Soymeal Exports Rise

 

The global fears of a bird flu pandemic, meantime, had little impact on India's soymeal exports in October.

 

Soymeal exports in October rose to 160,250 tonnes from 18,750 tonnes in the same month last year, the Solvent Extractors Association said Tuesday.

 

India's soymeal exports rose because the country's soybean crushing margins have improved over the past several months, said B.V. Mehta, the association's executive director.

 

This has led to more soymeal output and exports, he added.

 

Thursday, South Korea's Nonghyup Feed Inc. bought 25,000 tonnes of Indian soymeal from trading house Bunge at US$231.79/tonne, C&F, excluding a second and third port discharge premium of US$1.50/tonne.

 

In another development, the Thai government last week agreed to remove import tariffs on 10 agricultural commodities, including soybean, from four Southeast Asian nations - Myanmar, Laos, Cambodia and Vietnam.

 

The removal of the tariffs is in accordance with farm agreements that Thailand will sign with these countries.

 

The agreement will allow Thai private investors to jointly invest with farmers in these countries, to cultivate crops. Thailand in turn will buy the agricultural produce from these countries.