March 16, 2009

Asian grain prices are likely to be mixed in the coming days as Chicago Board of Trade contracts continue to be led by outside markets, notably equities and crude oil, market observers said Monday.

 

Wheat futures on CBOT fell Friday after posting strong gains of late, with the May contract easing back 6 3/4 cents to US$5.18 1/4 per bushel as profit-taking emerged ahead of the weekend, said traders.

 

"The outlook for wheat isn't as strong as some of the other grains due to supply and demand fundamentals. Supply is generally abundant, though so long as corn and soybeans stay firm, (CBOT) wheat should find some support at US$5.00 a bushel," said a trader in Tokyo.

 

Generally, grain traders are waiting for direction, and CBOT will continue to be heavily influenced by outside markets ahead of the U.S. Department of Agriculture's prospective plantings report due March 31, he said.

 

CBOT soybean contracts also settled lower Friday, with the March contract down 16 1/2 cents at US$8.82 1/2, and may test lower in the coming sessions before finding support around US$8.30, said the Tokyo-based trader.

 

Further downside looks possible due to bearish import data from China Monday, which showed an 89% on-year decrease in soyoil imports in February to 40,000 metric tonnes, while soyoil imports in the first two months fell 89% on year to 60,000 tonnes.

 

China's soyoil imports in the coming months could remain sluggish as warmer weather may boost palm oil consumption. Palm oil solidifies in colder conditions and therefore isn't preferred during winter. Also, high soybean stocks at the country's ports may prompt traders to curb imports, said Lv Qinghai, an analyst at Tianqi Futures.

 

Around 3 million tonnes of soybean stocks are at Chinese ports, little changed from a year ago.

 

CBOT corn futures, however, continued their upward trend last week, with the May contract ending Friday up 3 1/4 cents at US$3.88 1/2 a bushel.

 

Analysts said U.S.-based Informa Economics' estimate of 81.4 million planted corn acres for 2009, released Friday morning during trading, helped keep the market firm even as wheat and soybeans slipped.

 

"What the Informa numbers suggest is that the shift away from corn and into soybeans accelerated between their last estimate and this month's estimate," said Dave Marshall, an independent commodity broker and adviser in Nashville, Ill.

 

The outlook for rice prices, however, remains toward the bearish side as selling on CBOT continued at the tail end of the week following a weak supply-and-demand report from the U.S. Wednesday.

 

"Since the market broke off (Tuesday's) rally, it's been nothing but selling," said Ed Taylor, analyst for firstgrain.com.

 

CBOT's May rice contract ended down 44 1/2 cents at US$11.62 1/2 per bushel, while July rice ended down 41 1/2 cents at US$11.83.

 

In other grain news, Australian Federal Police are still considering whether to lay criminal charges against those involved in agribusiness AWB Ltd.'s (AWB.AU) "wheat-for-weapons" scandal in Iraq, Agriculture Minister Tony Burke said Sunday.

 

"The decisions on convictions or on people being charged will be taken by the AFP, and they certainly haven't...abandoned that process," Burke said on Network Ten's Meet the Press program.

 

The minister also welcomed interest expressed Thursday during a visit to Australia by Iraq's prime minister and trade minister for that country to buy about 1 million tonnes of Australian wheat a year.

 

"Australian farmers suffered terribly when the Iraqi Grains Board shut us out of wheat sales following the wheat-for-weapons scandal. To be back in there and able to sell Australian wheat to Iraq again is a very important boon for Australian industry," Burke said.