January 9, 2008

Wheat prices may continue their slide over the next few days as the demand picture remains bleak.

 

For the world's biggest wheat exporter, the U.S., exports for the week ended Jan. 1 totaled 41,900 metric tonnes, down 90% from the preceding week.

 

Wheat prices are also falling in Australia, where farmers are deferring sales of their stored crop, said an analyst report by the Commonwealth Bank of Australia.

 

However, a report by growers' lobby group U.S. Wheat Associates said upside risk to wheat prices remains this year.

 

It said global wheat stocks offer only a small cushion to any likely production shortages in 2009, which could result in price volatility.

 

It added that as crude prices recover, this could increase demand for corn, which may raise corn acreage in the U.S. compared with wheat this year.

 

On the bearish side, the report said index funds still hold 47% of all open interest long positions in Chicago Board of Trade wheat contracts. If they choose to liquidate these positions, it would make wheat prices vulnerable.

 

In wheat deals this week, Japan's Ministry of Agriculture bought 127,000 tonnes in its first weekly wheat tender for 2009.

 

Meanwhile, Tuesday is the last day for submitting bids for the state-owned Trading Corporation of Pakistan's tender to import 250,000 tonnes of U.S. wheat.

 

In other deals this week, the Major Feedmill Group, a South Korean feedmillers association, bought 45,000 tonnes of Brazilian corn for US$198.50/tonne.

 

The shipment will be delivered in South Korea between Jan. 16 and Feb. 1.

 

In other news, CBOT soybean futures are rising sharply in electronic trading Friday, tracking early gains in Nymex crude futures and other commodities, besides continued concerns about dry weather affecting the soybean crop in Argentina and Brazil.

 

At 0628 GMT, CBOT March soybeans were up 26.0 cents at US$10.15/bushel.