SE Asia's soymeal demand expected to surge

SE Asia's soymeal demand expected to surge

SINGAPORE (Reuter): Soymeal demand in Southeast Asia is
expected to surge in the coming months as most countries in the
region have not yet covered their requirements up to the end of
the year and into 1997, traders said.

Buyers may also scramble to beat a further jump in prices
after a bullish United States Department of Agriculture (USDA)
crop report on Wednesday for both soybeans and meal.

"There's a shortage of soymeal here. Many countries in the
region are not covered for soymeal in 1997," the managing
director of a Western commodity house told Reuters Thursday.

"The soymeal shortage is in the forward months. Malaysia is
looking for 200,000 tons for late 1996. Thailand's requirements
will be about the same and we're still calculating how much
Indonesia will need," one trader in Singapore said.

Countries in the region are waiting for the Indian soybean
harvest to begin in November, but some buyers may be forced to
buy small lots ahead of the crop to meet commercial needs.

Indian new crop soymeal is quoted in Southeast Asia at around
US$315-$320 a ton C&F for November/December shipment, with old
crop quoted at about $330-$335 a ton, Singapore-based traders
said.

"A lot of people want to get their Indian soymeal soon, but it
will only be available in December after harvest. Some people may
decide they need the material now," another trader said.

The USDA crop report was seen as positive for soybeans. It
said stocks, as of September 1, 1997, were seen dropping to 160
million bushels from the 175 million estimated last month.

The U.S. soybean crop was seen reaching 2.27 billion bushels
against 2.3 billion in the report in August, the USDA said.

Chicago Board of Trade (CBOT) soymeal prices closed higher on
Wednesday as the USDA also said U.S. ending stocks in 1997 would
be down to 200,000 tons from 225,000 tons estimated last month.

September CBOT soymeal rose 90 U.S. cents on the report to end
at $273.50 a ton.

But the USDA report was seen by Southeast Asian traders as
neutral for corn and wheat buying in the area.

The report said the U.S. corn crop should reach 8.804 billion
bushels versus last month's estimate of 8.695 billion bushels. It
said corn stocks on September 1, 1997 would touch 668 million
bushels versus 523 million previously.

The report helped push down prices of corn futures on the
CBOT. September CBOT corn shed five U.S. cents to close on
Wednesday at $3.60-3/4 a bushel.

Lower corn prices may trigger sporadic buying in the region,
but most nations were well-covered and will be in no rush to step
into the market, the traders said.

Higher wheat stocks, estimated by the USDA at 506 million
bushels next July against an earlier figure of 409 million, also
caused a slide in CBOT prices. September CBOT wheat dropped 17-
1/2 cents to end at $4.44 a bushel.

The grain and oilseeds business in Southeast Asia was quiet,
the dealers added.

"There's been no large business in the region lately. No one's
keen to talk," one trader said.

"The USDA report is seen here as neutral if you talk about
buying intentions. I don't think it's going to change the
situation here a lot. Buyers may wait awhile and see if grain
prices fall further before acting," a dealer in a European
trading house said.

Countries like Malaysia and Thailand were already well-covered
for corn and the bumper harvest in Indonesia would keep supplies
ample in the region's most populous nation, analysts said.

Prices of U.S. corn in Southeast Asia were quoted in a range
of $170-$172 a ton C&F for October-December shipment on a Panamax
vessel, dealers said.

One dealer said the corn price could slide to around $167-$168
a ton C&F, reflecting lower prices in Chicago.

"Several countries here have already put on reasonable
coverage on the grains side so there is no incentive to come into
the market at once. They'll probably take their time for things
to settle down," one dealer said.

The price falls in the CBOT may also be temporary because of
reports a cold front may sweep into the U.S. corn belt and
concern over the lag in the maturity of the crop, a trader said.

"Many of the buyers in the region are satisfied in sitting
back and see how things go," one trader said.