South Korea snap up U.S., Indian soymeal on price

SEOUL, Sep 29 (Reuters) South Korean soymeal buyers have been aggressively buying U.S. and Indian cargoes in recent weeks and have covered their needs up to March 2007, grain traders said on Friday.

They added relatively stable prices had encouraged the country's feedmakers to cover for the first quarter of next year at least two months earlier than normal.

''The heavy buying was backed by relatively stable prices on the Chicago Board of Trade and in the Indian market,'' said an official at a foreign trading house.

''Buyers were happy with current prices and rushed to cover their requirement before soymeal prices start rising on Indian supply shortages,'' the official added.

Soy futures on the Chicago Board of Trade have been weak as the harvest of one of the largest U.S. soybean crops gets underway.

Indian soymeal from the new soybean crop would be available by late October. Prices usually rise after January as supplies becomes scarce.

In September, South Korean feed makers signed import contracts for 376,500 tonnes of soymeal for first quarter arrivals. Out of that, they purchased 269,000 tonnes from India and 107,500 tonnes from the United States.

South Korea annually consumes about 2.2 million tonnes of soymeal for feed, importing 64 percent and buying the rest from local crushers, CJ Corp. and Shin Dong Bang Corp.

South Korean crushers usually price their soymeal at a 6.5 percent premium over average soymeal import prices.

SOUTH AMERICAN MEAL Feed importers were not keen on South American supplies, which were offered at a a tonne discount to U.S. cargoes.

''The price gap between South American soymeal and U.S.

soymeal should be more than per tonne for the Latin meal to be attractive for buyers,'' said an official at a feed miller.

''Considering current prices and the protein content, U.S. and Indian soymeal are more attractive than South American meal.'' South American soymeal, with a minium protein of 45.5 percent, was offered around 5 per tonne, including cost and freight, while U.S. soymeal with a higher protein level of 48 percent, was quoted around 0 per tonne, traders said. Indian soymeal with 46.5 percent protein was offered around 5.

Soymeal, a by-product of crushing soybeans, is an ingredient in animal feed and the amount of protein sets its price.

''South Korean buyers have almost completed purchasing its first quarter requirements. So they will slowly turn to the South American new crop for arrivals from May,'' another trader said.

REUTERS SBA HS1334