January 17, 2007

 

Asia Grain Outlook on Wednesday: Premiums may fall on softening CBOT

 

  

Premiums of grains delivered to Asia may fall over the remainder of this week, as Chicago Board of Trade corn futures may continue climbing down from gains over the past several sessions.

 

Both wheat and soybean futures on CBOT are following corn's lead and a slip in corn futures may push these down too.

 

Additionally, soybean futures are being pressured by good South American crop conditions, while wheat futures are being pressured by weak U.S. exports.

 

Tuesday was the only trading session on CBOT this week so far and all grains futures settled lower that day. The exchange was closed Monday.

 

In Asia, Singapore-based traders said that a price surge in CBOT corn futures last week tempered corn buying throughout the region.

 

"Prices are too high right now, so traders are going to wait, hoping for prices to come down," said one trader at a large brokerage.

 

The trader added, "Because countries have already fulfilled their January and February needs, they can afford to wait a week or two before buying March shipments."

 

In an expected grains deal this week, Japan's Ministry of Agriculture is seeking a total 125,000 metric tonnes of wheat from the U.S., Canada and Australia in a tender to be concluded on Thursday.

 

In other news, India's wheat plantings between Oct. 1 and Jan. 12 are estimated at a record 27.94 million hectares, up from 26.17 million hectares in the year-earlier period, the latest government data showed.

 

Plantings of wheat so far have already surpassed last year's total of 26.6 million hectares.

 

Harvesting will begin next month.

 

In a significant development, the Philippines and China this week signed nine joint venture agreements which will pave the way for a total investment of PHP240.1 billion (US$4.9 billion) in the country's farm sector, Agriculture Secretary Arthur Yap said.

 

These agreements include a memorandum of agreement which provides for the development of 1 million hectares of Philippine farmlands for hybrid corn, hybrid rice and hybrid sorghum by the Fu Hua Co., China Development Bank and the Jilin provincial government.

 

This project will involve around US$3.83 billion in Chinese investment, Yap said.

 

In more news from Philippines, Vietnam is likely to supply the bulk of the 500,000 tonnes of rice that the Philippines plans to buy at a tender held Tuesday, traders said.

 

The winning bids will be announced over the next five days.

 

Traders said the National Food Authority or NFA, the Philippines' state-owned grains trading firm, could buy a total of 474,000 tonnes of rice from Vietnam, as offers of Thai and Pakistani origin rice were of limited quantity.

 

The NFA plans to buy the 25% broken variety for shipment between February and March this year.