December 19, 2008

Asia Grain Outlook on Friday: Soybean prices unlikely to move much

Soybean prices are expected to fluctuate in a tight range through the end of the year, supported by good underlying demand.


"I am quite neutral on prices. Fundamentals are not likely to change much in the near term," said an analyst in a Tokyo Brokerage.


However, the dollar's recovery could push prices lower, so traders are watching the euro-dollar exchange rate closely for any impact on grain prices, the analyst said.


Otherwise, the soybean market is well supported by healthy demand for exports, and there are some concerns about dry weather affecting Brazil's developing soybean crop.


Technical support for the January soybean contract on the Chicago Board of Trade also seems to be holding well at US$8.50 a bushel, traders said.


At 0646 GMT, the January soybean contract was down 6.5 cents at US$8.63/bushel.


In a report titled Rabobank Outlook 2009 - Down to Earth, the bank said soybean prices are likely to remain volatile in the medium term, despite higher production in the crop year to August 2009, as Chinese soybean demand continues to be robust, pressuring global stocks.


In the long term, however, yield improvements through better farm inputs and farm management practices and expansion of farming area, especially in South America, there could be an increase in global soybean output, the report said.


"This will gradually bring about a greater balance between supply and demand. It could also result in rebuilding stocks and bring about a stabilization of prices (in the longer term)," it said.


In deals this week, Japan's Ministry of Agriculture bought a total of 62,000 metric tonnes of wheat from the U.S. and Australia in a tender concluded on Thursday.

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