March 20, 2009

Asian grain prices may extend recent gains in the days ahead on the back of firmness in Chicago Board of Trade futures, which in turn have been bolstered by weakness in the dollar after the Federal Reserve said it planned to inject more than US$1 trillion into the U.S. economy.

 

CBOT wheat futures rallied Thursday to end the day near the session high, closing up 25 1/4 cents at US$5.55 1/4 per bushel as strong fund buying overshadowed generally poor export demand. A test of US$5.80 resistance now looks possible, as long as crude oil and equity markets remain firm, traders said.

 

In India, wheat output in 2009 is likely to exceed an earlier estimate of 77.8 million metric tonnes because of a late spell of rain and cooling of temperatures in some growing regions, a senior farm ministry official said Friday.

 

"According to field reports, wheat output may be better than estimated," farm commissioner N.B. Singh told reporters on the sidelines of a conference to assess seasonal crop output.

 

India saw a record crop of 78.6 million tonnes of wheat in the last crop year to June 2008.

 

Meanwhile, Japan's Ministry of Agriculture, Forestry and Fisheries has bought all 106,000 tonnes of wheat in a tender issued Tuesday and concluded Thursday, said an agriculture ministry official. The shipment is expected to arrive in May, he said.

 

Weakness in the U.S. dollar was also a supportive factor for CBOT corn futures, which settled Thursday up 8 1/4 cents at US$3.96 1/2 per bushel.

 

In the near term, CBOT May corn will likely find resistance at US$4.00 due to strong farmer selling at that level and generally weak demand, said traders.

 

Relatively weak U.S. corn export sales data released Thursday highlighted the fact that "demand is still not up to snuff," said Joel Karlin, analyst for Western Milling.

 

The outlook for rice prices meanwhile has turned decidedly stronger following recent steep falls, though traders said CBOT rice needs to surpass the March high of US$13 per hundredweight to signal a turnaround.

 

CBOT's May rice contract has climbed US$1.35 since a Monday intraday low, supported in part by a large purchase of U.S. rice by Iraq, traders said.

 

In other rice news, Indonesia will allow private rice exporters to join Bulog - the national procurement agency and previously the only agency allowed to export the commodity - in exporting high-quality rice come April, a senior government official said Thursday.

 

Private rice exporters can apply to export up to a total of 100,000 tonnes of high-quality rice from April to June, which coincides with Indonesia's rice harvest season, said Bayu Krisnamurthi, deputy to the Coordinating Minister for the Economy.

 

In soy news, India's state-run PEC Ltd. floated a tender to sell 3,161 tonnes of imported crude soybean oil in the local market, the company said.

 

The tender will close March 24, the company said in a statement late Thursday.

 

CBOT May soybeans rose 25 1/2 cents to US$9.40 1/2 Thursday, again with traders attributing the rise to weakness in the dollar.

 

Meanwhile, Australian agribusinesses are increasing their presence in rapidly emerging grain exporter Ukraine.

 

ABB Grain Ltd. (ABB.AU) has already traded more than 800,000 tonnes of grain, chiefly barley, since its first export shipment in August, Managing Director Michael Iwaniw said in a presentation issued Thursday.

 

New World Grain "is actively seeking" to buy export terminal, inland storage and elevator assets. The company wants to have 300,000 to 400,000 tonnes storage capacity in its own right and rent a further 200,000 tonnes capacity. It currently rents 100,000 tonnes storage and negotiates port usage, he said.