December 13, 2006

 

Asia Soybean and Grain Outlook: Soybean demand may remain sluggish

 

 

Demand for soybean in Asia is likely to remain sluggish in the week ahead, largely because the world's largest importer - China - is unlikely to step up buying, trader said Wednesday.

 

China currently has ample domestic soybean stocks and demand for soymeal - used as animal and poultry feed - has been sluggish, affecting demand for soybean.

 

Analysts have said China's soybean imports could be around 6-8 cargoes over the week.

 

In China's local markets, soybean prices continue to fall reflecting weaker Chicago Board of Trade soybean premiums over the past few sessions and lower soyoil prices in China.

 

Meanwhile, sale of soybean from the newly harvested crop is also rising as Chinese farmers are anxious about declining soybean prices and want to sell their crop at current prices, traders said.

 

Imported soybean prices, however, continue to be higher than local prices.

 

Import arrivals totaled 2.07 million tonnes in November, and are expected to reach 2.2 million-2.3 million tonnes this month, according to a report by China's COFCO Futures Co.

 

Premiums for soybeans delivered to Asia may fall in the week ahead, as Chicago Board of Trade soybean futures could fall further on forecasts of favorable crop conditions in South America, analysts said.

 

In other news, representatives of major soybean exporting countries in North and South America are currently in India to explore opportunities for soybean exports to India.

 

"Soybean industry representatives from Argentina, Brazil, Paraguay and the United States will cooperate in building worldwide soybean demand, starting with India," said Virgil Miedema, regional director for the South Asia chapter of the American Soybean Association .

 

India currently imports soy oil and exports soymeal, but it doesn't import soybean since stringent quarantine restrictions make imports cumbersome for traders.

 

"Even if a provision is kept for annual increases in local output, the demand for soybeans and soy products such as soymeal is expected to outstrip supply soon," said Dan Duran, chief executive of the U.S. Soybean Export Council.

 

He said India may begin to import soybeans or soymeal or both in five years.

  

 

Corn Premiums Seen Higher; Wheat To Remain Weak

 

 

In other grains, corn premiums are likely to rise in the week ahead as export demand for U.S. corn remains buoyant.

 

In wheat, premiums may fall in the absence of significant export demand for U.S. wheat, analysts said.

 

In the Asian cash market, Japan's Ministry of Agriculture, Forestry and Fisheries is seeking 147,000 tonnes of wheat from the U.S., Canada and Australia, in a tender to be concluded on Thursday.

 

As part of the tender, the ministry is also seeking 40,000 tonnes of Australian barley.

 

In other deals, Taiwan's Members Feed Industry Group Tuesday bought 60,000 metric tonnes of U.S corn from trading house Cargill.