March 5, 2010

 

Asia Grain Outlook on Friday: Ample supply may weigh on prices

 

 

Asian soybean prices are likely to be under downward pressure next week due to ample supply, but corn prices may remain steady on local demand in the U.S., trade participants said Friday.

 

Wheat prices are also bearish because of aggressive selling from non-U.S. origins into the physical market, they said.

 

"If global physical supplies are accounted for, it is difficult for (Chicago Board of Trade wheat) prices to sustain above US$5.0/bushel, but short covering has been recently providing support," a Singapore-based executive at a global trading company said.

Both the U.S. and the European Union are finding it difficult to get rid of excess supply because of sales being made out of the Black Sea region, he said.

 

Black Sea wheat is at a freight disadvantage in Southeast Asia, but large sales have been made elsewhere and this is weighing on global prices.

 

CBOT May wheat futures ended Thursday down 13 and 1/2 cents at US$5.0225 a bushel.

 

Analysts expect a shift towards corn and soybeans from wheat during the spring plantings in the U.S.

 

"The next major market direction in grains will be provided by the (U.S. Department of Agriculture) plantings intentions report by the end of this month," a Tokyo-based trading executive said.

 

There aren't any significant leads expected in the interim from the USDA demand-and-supply report to be issued next week, he said.

 

Due to large sales of soybeans expected out of South America in the next few weeks, prices may remain under pressure.

 

Soybean May futures on the CBOT may fall to US$9.30/bushel, a trader in Japan said.

 

CBOT May soybeans futures settled 21 1/2 cents, or 2.23%, lower Thursday at US$9.42.

 

However, corn prices are expected to mostly move sideways next week due to strong demand in the U.S. and steady crude oil prices.

 

CBOT May corn futures ended down 3 3/4 cents Thursday at US$3.83 cents/bushel.

 

Most traders expect prices to range between US$3.80-US$3.90 next week.

 

In physical market news, the Kaohsiung branch of Taiwan's Breakfast Soybean Procurement Association bought 48,000 metric tonnes of soybeans Thursday from Cargill in a tender for shipment in the second half of April at a US$2.03/bushel premium over the CBOT May futures contract.

 

Japan's Ministry of Agriculture, Forestry and Fisheries Thursday bought 132,000 tonnes of wheat in a regular tender. a ministry official said.

 

The wheat of U.S., Canadian and Australian origin in six cargoes is for shipment between April 16 and May 20.