February 21, 2007

 

Asia Grain Outlook on Wednesday: Premiums may rise tracking CBOT strength

 

 

Premiums of grains delivered to Asia may rise in the remaining part of this week as Chicago Board of Trade futures may continue to climb on reports of a shift from El Nino to La Nina weather conditions this year, which may result in dry conditions in U.S. this summer.

 

Over the last few sessions, the weather worries have provided support to grain futures.

 

Soybean premiums may rise faster than other grains on expectations that less soybean will be planted in the U.S. this spring, as farmers switch to corn to take advantage of higher prices.

 

In Asia, trading has been subdued so far this week, as many traders in the region celebrated the Lunar New Year. No major grains tenders have been concluded so far this week.

 

Two major wheat import deals were concluded last Thursday, however.

 

Japan's Ministry of Agriculture, Forestry and Fisheries bought a total of 115,000 metric tonnes of wheat from the U.S., Canada and Australia in a tender.

 

The Taiwan Flour Millers Association bought 42,650 tonnes of U.S. No. 1 wheat from Columbia Grains.

 

In other news, India's federal government Tuesday said it will sell 365,000 tonnes of wheat by March 31 on the local market to keep inflation in check. The sales will be made through provincial governments at a fixed price of INR9,860.60/tonne.

 

On Tuesday, India's Agriculture Minister Sharad Pawar had said the condition of the standing wheat crop in the fields was "extremely good" and output in 2007 may exceed 72.5 million tonnes. Wheat harvesting is expected to begin in earnest next month.

 

Last week, the government banned the export of wheat, as a pre-emptive move to ensure domestic wheat stocks remain adequate and retail prices of wheat and wheat flour remain in check.

 

India imported nearly 6 million tonnes wheat in 2006. While there haven't been fresh imports this year so far, analysts said there is a strong possibility the country may import wheat again this year, though the volumes may be much less than last year.