February 12, 2007

 

Asia Grain Outlook on Monday: Premiums may rise on CBOT futures strength

 

 

Premiums for grains delivered to Asia may rise in the week ahead as technical strength in Chicago Board of Trade corn futures is likely to keep pushing corn, wheat and soybean futures higher.

 

Over the past several weeks, corn has emerged as the key driver of U.S. grains futures.

 

Additionally, for wheat, U.S. exports have improved over the past few weeks, further supporting prices.

 

On a longer-term perspective, grains and oilseeds prices are likely to rise 7% in 2007 as El Nino-related weather disturbances, competition among crops for farm lands, and growing demand for food, feed and biofuels pressure food supply, said London-based Economist Intelligence Unit, or EIU, in a press statement late Friday.

 

"Corn, soybeans and palm oil will be in especially short supply following unfavorable conditions in the main producer regions and rising ethanol demand," said the EIU report.

 

Wheat prices may stabilize as output will likely rise in 2007, while corn prices will likely gain even if there is a record output as competition grows among food, feed and ethanol in the use of corn, the report said.

 

The report added that falling stocks will likely keep edible oils and oilseeds prices firm throughout the year.

 

In other news, commodities analysis firm JCI Shanghai said Chinese soybean imports remained strong last week, with booking of around nine to 11 cargoes, all from South America.

 

It said that while seven to nine cargoes booked were for Brazilian soybeans, for shipment in April, the remaining cargoes were for Argentine soybeans for shipment in July.

 

Analysts said premiums for Brazilian soybeans, to be shipped to China in April, are at 152-157 U.S. cents/bushel to the CBOT March contract and Argentine soybean offers for July shipment are at 130-135 U.S. cents/bushel to the CBOT July contract.

 

Analysts said China's soybean imports may gather pace in the next several weeks on an expected decline in domestic oilseed production and a robust demand outlook for the livestock and poultry industry.

 

In deals last week, Japan's Ministry of Agriculture, Forestry and Fisheries bought a total of 160,000 tonnes of U.S., Australian and Canadian wheat in a tender concluded Thursday.