February 14, 2007
Asia Grain Outlook on Wednesday: Premiums May Rise On CBOT Gains
Premiums of grains delivered to Asia may rise in the remaining part of the week, largely on expected gains in Chicago Board of Trade futures.
CBOT corn and soybean futures are expected to make gains over the next few sessions of trading, led by technical strength and rising crude oil prices.
Since both soybean and corn are used to make biofuel, their prices often track crude prices.
Wheat futures are largely tracking corn and soybean price movements for now.
In other news, India has banned exports of wheat to control local prices and augment supplies, a senior government official said Tuesday.
"Several traders are planning exports from the western province of Gujarat as the local harvest has begun to arrive in the market...we won't allow this to happen until the end of December," said the official, who didn't want to be named.
However, realistically there is no scope of India exporting wheat in a big way, at least in 2007, given the current high domestic prices. The move by the government is more of a precautionary step, as it is anxious to avoid any situation that would increase food prices in India.
Meantime, world wheat prices continue to closely track development on India's wheat production front.
"If the market believes India doesn't need to import wheat, the current wheat price premium (on CBOT) will fade," Mike Zuzolo, chief analyst at Risk Management Commodities in the U.S. said Tuesday.
In wheat news, a U.S. Department of Agriculture report this week said Philippine wheat imports in 2006-07 marketing year (September-August) will contract from the previous year's level, as higher wheat prices are bringing a shift away from wheat imports to corn for both food and feed use.
Concerns over the local corn quality will also lead to increased corn imports during the year, the report said.
The report didn't mention either corn or wheat import estimates for 2005-06 or 2006-07.
