March 7, 2007

 

Asia Grain Outlook on Monday: Wheat may slide on bearish global news

 

 

Wheat prices may continue to slide during the rest of the week on a slew of bearish news from around the world.

 

U.S. futures traders Man Financial said there is anticipation of global wheat stocks rising in the 2007-08 crop year (September-August), while Australia is expected to reap a strong wheat harvest later in the year of around 25 million metric tonnes.

 

The recently harvested Australian wheat crop was 9.8 million tonnes, ravaged by drought.

 

But a developing La Nina weather condition is raising hopes for good rains in Australia in time for the next wheat crop.

 

Man Financial added that among the bearish news is the possibility of Ukraine doubling its wheat exports to 6 million tonnes this year and Pakistan adding an additional 300,000 tonnes of export-available wheat.

 

Additionally, more bearish news for wheat prices came in from India Wednesday, as agriculture minister Sharad Pawar said the currently-harvested wheat crop could reach 73.5 million tonnes, up 1 million tonnes from an earlier forecast.

 

"The current weather conditions are extremely favorable for the wheat crop, (although) the next 15 days are crucial. If similar conditions remain, output will exceed the previous estimate," Pawar told reporters on the sidelines of the India-Africa Agrifood Summit.

 

A decision on whether India needs to import wheat will be taken after wheat is purchased in the domestic market over the next two months, he said.

 

Last year, India imported 6 million tonnes of wheat, which supported international prices throughout the year.

 

Corn and soybean prices may also drift lower in the remainder of the week, as not much fresh news is expected until the end of this week. Friday, the U.S. Department of Agriculture will release its March supply and demand report for crops.

 

In other news, a U.S. soybean industry executive told Dow Jones Newswires that U.S. exports of soybeans to China are going at a good pace.

 

"Even last week, there was around 250,000 tonnes of new soybean sales from the U.S. to China. This is turning out to be a good marketing year for U.S. soybean exporters to China," said the executive.

 

He said China's soybean demand is on the rise, fueled by growing prosperity translating into high meat and vegetable oil sales.

 

Soybeans are used to manufacture soymeal, a key feed ingredient, and soyoil, a cooking medium.

 

The executive said soybean prices during the rest of this year would depend a lot on how soyoil demand from the U.S. biodiesel sector builds up.

 

Another key factor will be how soybeans are able to fare against corn as far as competition for U.S. farm acreage goes.