February 27, 2008

 

Asia Grain Outlook on Wednesday: Wheat may extend gains on CBOT lead

 

 

Wheat prices are likely to extend their gains during the rest of this week on continued bullishness in Chicago Board of Trade wheat futures.

 

In Tuesday's U.S. trading, CBOT's May contract ended 90 cents higher at a new all-time high of US$12.14-1/2 per bushel.

 

In order to help the price rally play out, CBOT increased its daily price limit to US$1.35/bushel from Wednesday, compared with 90 cents Tuesday.

 

The wheat market continues to be underpinned by a severe shortage in global wheat stocks, particularly in the U.S., besides the market ensuring that prices are high now in order to motivate farmers to grow more wheat in 2008.

 

In Asian trade Wednesday, profit-taking bought down wheat futures a notch, with CBOT's May contract trading 36.4 cents lower at US$11.78/bushel at 0542 GMT.

 

Meanwhile, prominent edible oil analyst Dorab Mistry told a conference in Kuala Lumpur Wednesday about substantial upside to soybean and soyoil prices.

 

He said weather in Argentina and Brazil's Rio Grande Do Sul province during the next two months is crucial to decide the fate of the soybean crop.

 

Mistry added that soybean supplies are likely to be very tight during the next 12 months.

 

While grain prices remain high and stocks are running low globally, buyers are trying different ways to meet their grain demand.

 

In South Korea, four major companies - Daesang, Samyang Genex, Doosan Corn Products Korea and Shindongbang CP - will be importing a total 50,000 metric tonnes of genetically modified U.S. corn for food use, to be delivered in May.

 

The shipment will mark the first time South Korean food companies use GMO corn in food. South Korean daily Chosun Ilbo said Tuesday the move could cause a "ripple throughout the Korean food industry."