December 20, 2006

 

Asia Grain Outlook on Wednesday: Asian soybean demand may rise

  

 

Demand for soybean in Asia may rise in the week ahead as Chinese traders are likely to start importing their March and April soybean requirements.

 

"The Chinese soybean crop (currently being harvested) will soon be absorbed almost completely. So, imports have already started picking up," said a trader in a Beijing-based grains trading firm.

 

Traders added that so far this week, Chinese importers have booked two soybean cargoes. Chinese traders are currently booking soybean shipments for March and April.

 

Since Chicago Board of Trade soybean futures have softened a bit over the past few weeks, prices right now are quite attractive for Chinese buyers, they said.

 

The premium for U.S. soybeans delivered to China is around 160 U.S. cents a bushel to the CBOT January contract, while soybean from South America is commanding a 180 cents/bushel premium to the CBOT January contract.

 

However, weak soymeal sales may weigh on Chinese soybean imports, as offtake from the poultry and hog sectors, which use soymeal as feed ingredients, remains sluggish.

 

In other grains, Singapore-based traders said corn imports in Asia will likely remain in a lull until the middle of next month, because of rising international corn prices.

 

A trader at a large Singapore broking firm said that most traders are approaching the current corn market with caution.

 

"Most traders are reluctant to make large purchases and are currently intent on just buying enough to meet their immediate needs," said the trader.

 

Traders added that South Korean corn buyers are perhaps the most active right now, since they are buying corn to meet needs up to May and June, while most other Asian buyers are focused on fulfilling their February and March needs.

 

Among the expected import deals this week, Japan's Ministry of Agriculture, Forestry and Fisheries is seeking 140,000 metric tonnes of wheat from U.S., Canada and Australia in a tender to be concluded on Thursday.

 

In other news, India's agriculture minister Sharad Pawar Tuesday said that the higher-than-usual winter temperatures in India are unlikely to reduce the output of crops such as wheat and rapeseed, currently being sown.

 

"I have spoken to the officials of the meteorological department...No adverse impact is seen on the crops," Pawar said.

 

Over the last two years, India has been losing around 4 million tonnes of wheat each year due to higher temperatures in winter.

  

The National Food Authority, the government's grains trading firm, will buy the 25% broken variety for delivery between February and April next year.