November 30, 2005

 

 

Asia Soybean Outlook: Premiums may fall; bird flu, freight

 

 

Premiums of soybeans delivered to Asia are expected to keep falling in the week ahead, as bird flu concerns mount in Asia and ocean freight rates ease.

 

U.S. soybean futures has had a bearish run over the past seven days, due to sluggish exports, a hitch-free South American crop and declining global feed demand.

 

Analysts said that unless exports revive, U.S. soybean futures may continue to extend their losses.

 

In China, soymeal demand from the poultry industry, as well as the crushing of soybeans, has dropped as new cases of bird flu spring up with an alarming frequency.

 

Some analysts said stocks of soybeans in Chinese ports may have already topped 2 million tonnes.

 

Analysts added that unless bird flu fears recede quickly, a near-term revival in soybean and soymeal demand in China seems remote.

 

China has reported 24 outbreaks of bird flu among poultry in recent weeks and three confirmed human cases of the disease, two of them fatal.

 

On Monday, private exporters reported to the U.S. Department of Agriculture export sales so far of 116,000 metric tonnes of soybeans for delivery to China during the 2005/2006 marketing year, which began Sept. 1.

 

In Japan, traders said soybean demand is quite low at present. Most traders are busy negotiating for January shipments.

 

Traders are looking to peg soybean premiums at around 190 cents a tonne above the January contract on the Chicago Board of Trade, for January delivery from the U.S. Gulf to Japan.

 

"Premiums in Japan are not expected to change much, as demand for soymeal has been hit by bird flu fears," said a trader in Tokyo.

 

Traders added that a continued fall in spot ocean freight rates for panamax-size cargoes is also pressuring premiums of soybeans delivered to Asian ports.

 

At present, the rate for a panamax cargo delivered from the U.S. Gulf to Japanese ports is around $43/tonne, compared with $45-$46/tonne two weeks earlier.

 

In major Asian deals this week, Taiwan Sugar Corp. bought 12,000 tonnes of U.S. No. 2 soybeans from trading house Agrex at $269.99/tonne, cost and freight, Kaohsiung.

 

TSC aims to ship the corn and soybeans either between Dec. 23 and Jan. 6 from the U.S. Gulf, or between Jan. 7 and Jan. 21 from the Pacific Northwest.

 

Also, the Kaohsiung branch of Taiwan's Breakfast Soybean Procurement Association will conclude tenders for 40,000-60,000 tonnes of U.S. soybeans later Wednesday.

 

BSPA aims to purchase the soybeans for shipment either between Dec. 15 and Dec. 29 from the U.S. Gulf, or between Dec. 29 and Jan. 12 from the Pacific Northwest.

 

In other news, data released by China's General Administration for Customs last week for Jan. 1-Oct. 31 showed total soybean imports by China at 21.4 million tonnes, up 38% from the year-earlier period.

 

China's imports of soybeans from Argentina increased a whopping 64.8% on year in the Jan. 1-Oct. 31 period to 6.5 million tonnes. Brazil and the U.S. were the other major soybean suppliers.