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Japan Grain-Buyers wait for further premium fall

TOKY: Japanese end-users were delaying US soybean purchases for May shipment in hopes of further dips in cost and freight (c&f) premiums amid a softer tendency in freight market rates, traders said on Monday.

US soybean premiums for May shipment were offered on Monday at around 100 cents a bushel over the May contract on the Chicago Board of Trade (CBOT) on a c&f basis, down from 103-105 cents a bushel a week earlier, they said.

"Soybean buying was not so active last week because an easier tendency in freight market rates has sparked hopes for a further fall in premiums," said a trader at a Japanese trading house.

"Our clients have finished covering 50 percent of their soybean needs for May shipment. I expect some of them will finish covering the remaining half by the end of this week, but others may delay purchases until the end of next week," he said.

Users who already ended soybean buying for May shipment have remained cautious about starting purchases for June, and they will probably wait for another couple of weeks, traders said.

Asian shipping agents said freight rates for panamax-class vessels between the US Gulf and Japan drifted lower last week on increased capacity as operators diverted ships to the profitable route. They also attributed softer freight rates to a retreat in fuel oil prices.

Rates for panamax-class vessels between the US Gulf and Japan for May shipment were indicated at around $23.50 a tonne on Monday, against $23.50-$24.00 a week ago, traders said.

NO FRESH DEALS FOR BRAZIL SOYBEANS

As for South American crops, Japanese end-users have yet to start buying for June shipment after they completed purchases for shipment from March to May earlier this month.

Traders said users are not in a rush to buy Brazilian soybeans for shipment in June and forward months, as Brazilian crops cost more than US crops due to a weather-related delay in the Brazilian harvest.

Brazilian soybean premiums for June shipment were offered on Monday at around 110 cents a bushel over CBOT's July contract on a c&f basis, while US soybean premiums for June shipment were offered on Monday at 96-97 cents a bushel over CBOT July.

Japanese are seen to have made deals to import around 400,000 tonnes of South American soybeans for March-May shipment, out of a total need for over 900,000 tonnes for crushing in the period.

Of total Japanese crusher needs for May shipment, estimated at 310,000 tonnes of soybeans, US crops are seen filling about half of the demand while South American beans fill the rest.

Some traders expected Brazilian soybean premiums would start to ease next month on harvest pressure, but others said premiums could be sustained at high levels on strong demand from local crushers as well as European buyers.-Reuters