March 23, 2012

 

US wheat, corn futures hike on Chinese demand

      

 

US wheat and corn futures increased on Thursday (Mar 22), improving after three straight sessions of losses due to speculations that China will import more grains following the purchase of 350,000 tonnes Australian feed wheat.

 

Soy prices fell after settling higher in the previous session despite reports of buoyant demand from China, the world's biggest soy importer. Traders said soy could edge up again due to lower output forecasts from South America.     

 

CBOT May wheat rose 0.55% to US$6.39-3/4 a bushel by 0457 GMT, after settling 1% lower on Wednesday (Mar 21). May corn gained 0.62% to US$6.46 a bushel, while soy lost 0.09% to US$13.53-3/4.   

 

"Wheat imports by China are definitely big, bullish news and traders anticipate China's demand to be very strong in the days to come as it tries to cool higher grain prices," said Lynette Tan, an analyst with Phillip Futures in Singapore.      "In my view, China will be buying more corn and wheat as well to keep local prices under check," she said.     

 

China bought 350,000 tonnes of feed wheat from Australia for US$280 a tonne, including cost and freight for June-July shipments this week.   

 

Corn prices in China's Dalian exchange climbed to a record high on March 19 and expectations that it will become a significant importer are propelling global grain prices higher.  

 

Last month, China's corn imports soared to 520,671 tonnes of corn, up from 1,035 tonnes in the February last year.

    

The USDA believes China will import at least two million tonnes of corn this year, but some analysts say China will not allow itself to become heavily dependant on foreign corn as it is on soy.    

 

China is the world's largest importer and consumer of soy, and Tan said lower output prospects in South America and higher demand from Beijing is supporting prices.   

 

On Tuesday, oilseeds analyst Oil World cut its Brazil's 2012 soy output forecast by 1.5 million tonnes to 66.5 million tonnes against 75.3 million tonnes the previous year as drought and fungus ravaged the crop.   

 

The Hamburg-based agency also reduced its forecast of Argentina's 2012 crop by 0.5 million tonnes to 46.5 million tonnes, down from 49.2 million in 2011. Paraguay's crop is pegged at four million tonnes, down from 8.4 million tonnes in

2011.   

 

The US is the world's largest soy producer followed by Brazil, with Argentina in the third place. A strike by truckers in Argentina will add to worries about the availability of South American soy supplies.