January 31, 2007

 

Asia Grain Outlook on Wednesday: Grains premiums may move either way

 

 

Premiums for grains delivered to Asia may move either way in the remaining part of this week, as Chicago Board of Trade futures haven't shown any definite price trend in the absence of significant fundamental news.

 

Both wheat and soybean futures are focused on movement of corn futures, which is by and large leading the grains market at present.

 

In Asia, the outlook for corn and wheat purchase remains bleak for the next few weeks as high prices are keeping buyers away.

 

On Tuesday, Japan's Ministry of Agriculture, Forestry and Fisheries said it wouldn't hold its weekly wheat purchase tender this week, without giving any reasons.

 

In January, corn buying in Asia got off to a weak note as high prices, steep ocean freight costs, sluggish feed demand and ample inventories kept traders on the sidelines.

 

In Asia the three biggest buyers - Japan, Taiwan and South Korea - have mostly stocked up for the first quarter and are in no rush to step up their imports for the next two months.

 

A Japanese trader in a Tokyo-based broking firm said: "By the end of 2006, traders had bought about 30% of Japan's April-to-June corn needs. But in the new year, business has been a bit slow, and no one seems to be in a hurry to buy the remaining 70%."

 

Besides high corn prices, the volatile ocean freight market is also making traders nervous, the trader said.

 

In other news, the Press Trust of India said in a report that recent rains in northern India have raised hopes of high wheat production - over 74 million metric tonnes - this year.

 

India produced 69.5 million tonnes wheat in 2006, which led the country to import 6.5 million tonnes of wheat, making it one of the leading wheat importers last year.

 

"Things have improved due to (recent) showers in wheat growing provinces of north India and if everything goes well we will achieve wheat production of over 74 million tonnes," B. Mishra, director of India's Directorate of Wheat Research Project, said.

 

He said the recent rise in temperatures in north India won't have any adverse impact on wheat production.

 

However, Mishra said, "The temperatures should not rise beyond (normal) levels during the last week of February and March to ensure high wheat production."