February 9, 2009
Asia Grain Outlook on Monday: Corn may rise on Asian demand, weather
Corn prices are likely to rise further as Asian feedmillers aggressively import while dry weather threatens corn and soybean crops in Brazil and Argentina.
Since last year, China's reduced corn exports have created a vacuum in Asian corn imports, which have benefited sales of U.S. corn.
According to Tim Hannagan of U.S.-based commodities broking firm Alaron, Asian feedmillers have been buying a lot of U.S. corn in the last three weeks.
Since the Lunar New Year festivities have now ended and Chinese companies may resume exporting corn, albeit in much reduced quantities than earlier years, Hannagan said if U.S. corn exports remain strong this week, it would signal a genuinely positive trend in Asian corn demand and not just a temporary spike in imports.
He added that it does seem that Asian hog and chicken populations are increasing, creating more feed demand.
Among Asian corn buyers, South Korea has been particularly aggressive, with major buying firms such as Nonghyup Feed Inc and the Korea Feed Association buying U.S. corn for May-July shipment last week.
Meanwhile, a dry weather pattern may continue in Brazil and Argentina over this week, which could affect not only corn, but also the soybean crop, both of which are supportive for global prices.
The price trend in wheat, however, is expected to remain weak in the week ahead as global supply continues to overwhelm demand.
According to a Commonwealth Bank of Australia analyst report, contrary to earlier expectations, China's drought isn't likely to support wheat prices, since the situation "may not be as critical as some had earlier reported."
However, wheat imports are likely to remain robust in Asia this week.
Trading Corp. of Pakistan, which last week bought 237,000 tonnes of wheat at US$231/tonne, is expected to award bids in a tender to import 250,000 tonnes of U.S.-origin wheat.
Japan's Ministry of Agriculture is also expected to hold its weekly wheat tender Tuesday. So far this year, the ministry has bought more than 100,000 tonnes every week, except the last week of January.
