January 9, 2006

 

Asia Corn Outlook: Premiums may fall on US futures

 

 

Premiums of corn and wheat delivered to Asia may fall in the week ahead on expectations that U.S. futures are likely to fall further.

 

Corn and wheat futures on the Chicago Board of Trade were mostly lower in the week to Friday.

 

Data due to be released by the U.S. Department of Agriculture this week are also expected to pressure wheat futures lower.

 

Asian demand for both these commodities continues to be sluggish, with hardly any fresh demand from Taiwan, Korea and Japan last week.

 

Most Asian traders are well-covered in corn and wheat for the first quarter of this year.

 

In the only major deal last week, Taiwan's Members Feed Industry Group, or MFIG, bought 60,000 metric tonnes of U.S.-origin corn from trading house Bunge in a tender concluded Friday.

 

MFIG bought 54,070 tonnes at $134.25/tonne, while the rest was purchased at 137.68 cents a bushel above the CBOT March contract.

 

China's grains output is expected to lag total domestic demand by around 15 million tonnes this year, China's Minister of Agriculture Du Qinglin said in a recent interview with the official Xinhua News Agency.

 

In 2005, China's total output of wheat was at 97.5 million tonnes and corn was at 134.5 million tonnes.

 

Du said Chinese domestic production of wheat this year will fall short by 8 million tonnes. However, corn output this year is expected to continue to exceed domestic demand. Xinhua didn't provide figures on how much corn production will exceed domestic demand for 2006.

 

In India, the current wheat crop will likely benefit from the extremely cold weather in the northern provinces over the past few weeks, a senior government scientist said.

 

Recent rainfalls in the country's wheat growing areas will also help in the development of wheat saplings.

 

The scientist said that if the weather continues to favor the crop, wheat output this year will likely be at least 74 million tonnes and may even touch 76 million tonnes, compared with 72 million tonnes in 2005.

 

India's wheat crop is sown from December to February and harvested in April.

 

In Pakistan, the shortage of wheat stocks has led to the closure of 250 flour mills in the North Western Frontier Province, GEO TV reported. Many mills weren't able to buy enough wheat stocks because they didn't get bank loans to do so.

 

In Australia, AWB Ltd. rejected a second wheat export application from Western Australia's grain handler and marketer, ABC Rural said on its Web site.

 

The news portal said Cooperative Bulk Handling, or CBH, resubmitted its application to export 100,000 tonnes of wheat straight to its six flour mills in Vietnam, Malaysia and Indonesia, bypassing the monopoly wheat export system owned by AWB. Last month, AWB rejected CBH's initial application.