December 14, 2005


Asia Soybean Outlook: Premiums may rise on China demand



Premiums of soybeans delivered to Asia are expected to rise in the week ahead, following renewed demand from China and gains in U.S. soybean futures in the week to Tuesday.


According to a report by National Australia Bank analysts Tuesday, China may have bought three cargoes of soybeans from the Pacific Northwest over the weekend. Export data due to be released Thursday by the U.S. Department of Agriculture may confirm these purchases.


Meantime, news that China's November soybean imports jumped 34.2% on month surprised several analysts, as it comes amid bird flu concerns and lower soymeal demand in the country.


China's General Administration of Customs also reported that the country imported 2.55 million metric tonnes of soybeans in November, compared with 2.51 million tonnes in the year-ago period. Traders said China's soybean imports may continue to stay above 2 million tonnes this month.


Analysts in China say the absence of any new reported bird flu outbreaks this month is boosting soybean and soymeal buyers' confidence, with soybean futures rising on the Dalian Commodity Exchange since Monday.


Meantime, improved demand for soybeans - especially from China - and bullish technical trends, pushed U.S. soybean and soymeal futures higher in the week to Tuesday.


However, rising U.S. soybean premiums are damping interest from buyers, such as those in South Korea.


"Current soybean and soymeal prices have suddenly become too high and we can't trade at these levels," said a trader in Seoul.


Soymeal prices are being quoted $10/tonne higher than those offered a few weeks ago, the trader said.


A sharp rise in U.S. barge freight rates are also expected to boost premiums for cargoes shipped from the U.S., especially the U.S. Gulf.


Barge rates are rising largely because cold weather is causing U.S. rivers to ice over.


In other news, buying from Taiwan and South Korea boosted India's soymeal exports in the week to Wednesday.


South Korea's Nonghyup Feed Inc. bought 30,000 tonnes of India-origin soymeal from trading house Sufflet for $208.89/tonne, cost and freight.


South Korea's Major Feedmill Group also bought 37,000 tonnes of Indian soymeal in private negotiations last week with trading houses Noble and Adani.


Taiwan's Major Feedmeal Group bought a total of 50,000 tonnes of Indian soymeal in December.


Although India's November soymeal exports rose to 266,675 tonnes from 174,950 tonnes in the year-ago period, Indian traders were still disappointed with the figures.


"Considering that the soybean crop was only recently harvested, the meal exports last month should have been more than 300,000 tonnes," said Sandeep Agrawal, director of Gujarat Ambuja Exports, a leading soymeal trading company.


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