January 8, 2011

 

Asian grain traders keep eyes on uncertain weather conditions

 

 

Asian grain traders are vigilant about uncertain weather conditions worldwide as volatile prices keep some on the sidelines.

 

"While there has been a lot of speculative activity in the futures markets, traders are still assessing the situation, including awaiting further news of the winter crop," said a Tokyo-based trader with an international trading company.

 

Grain prices have been gaining recently due to supply fears related to unfavourable weather including drought in Argentina, cold weather in the US and heavy rainfall in Australia.

 

However, grain prices on the Chicago Board of Trade retreated Thursday (Jan 6) due to an easing in concerns about supply and escalation in concerns about demand. Overnight rainfall in Argentina also weighed on prices.

 

In the corn market, CBOT futures closed solidly lower due to profit-taking and concerns that demand may fall short of expectations. Weekly US corn export sales data did little to encourage demand expectations. Sales of 369,000 tonnes were below estimates of 400,000-800,000 tonnes.

 

Furthermore, private analytical firm Informa Economics raised China's corn crop by 2.7%, surprising traders who had expected the country to increase imports this year due to a fall in domestic production.

 

Singapore-based brokerage Phillip Futures said that corn is likely to take cues from the movement of the US dollar amid a lack of fresh news.

 

In the wheat market, CBOT March wheat closed Thursday down 19 1/4 cents, or 2.4%, at $7.89 a bushel.

 

While there is some nervousness about global supplies of high-quality wheat after rains that hurt output in Australia, ANZ Bank said Friday (Jan 7) that heavy flooding in Queensland is unlikely to impact trade.

 

Queensland typically produces less than 10% of the national crop, and produced even less - around 5% - this crop year, with the harvest all but completed before the floods arrived. Losses to the wheat crop will be "minimal at an aggregate level," ANZ said.

 

In the soy market, an auction of 191,517 tonnes of soy from Heilongjiang's provincial reserves Friday failed to attract any bids, the China Grain and Oil Information Network said.

 

This is the first time this year the government has released soy reserves, but it failed to attract any bids due to ample supply and offer prices that were considered too high.