March 27, 2009

Asian grain prices are likely to stay mostly firm in coming days as traders continue to take cues from Chicago Board of Trade movements, where wheat, corn and rice futures climbed Thursday, though soybean contracts drifted lower as traders opted for a cautious approach to avoid risk, market observers said Friday.

 

In China, oilseed processors have asked the government to raise the import tax on soybeans to curb a sudden rise in imports that has put many domestic crushers out of business.

 

Industry participants who attended a meeting called by China's Ministry of Agriculture earlier this week also asked the government for subsidies to help them deal with the high domestic soybean prices that are causing the rise in imports.

 

Chinese soybean imports rose 61% on year to 3.26 million metric tonnes in February, as domestic prices continued to remain higher than international prices.

 

The Ministry of Commerce is scheduled to hold another meeting between March 31 and April 2 to discuss the impact of rising imports on the domestic crushing industry, an official who participated in the meeting said.

 

CBOT May soybeans ended 7 cents lower Friday at US$9.44, as the market consolidated in a recent range, though prices held above major moving-average support on technical charts. Traders said next week's U.S. plantings report could reveal record soybean acreage projections.

 

CBOT rice, however, reversed recent losses with the May contract up 31 cents at US$12.61 1/2 per hundredweight, supported by reports of strong export sales of 207,400 metric tonnes - a marketing year high - which were due to the purchase of 120,000 tonnes by Iraq last week, market observers said.

 

Meanwhile, leading wheat experts have reported significant progress in developing new varieties of wheat capable of resisting a virulent form of disease that threatens wheat production worldwide, India's Hindu Business Line of reported this week.

 

Research released at the Borlaug Global Rust Initiative 2009 Technical Workshop also confirmed that the dangerous and newly-emerged stem rust race known as Ug99 is now in Kenya, Uganda, Ethiopia, Sudan, Yemen and Iran, and is on the march toward South Asia, it said.

 

Breeding materials under development are sent to Kenya and Ethiopia, where they are exposed to Ug99 and then sent back to Mexico or Syria for further refinement, and then back to Kenya and Ethiopia for more exposure. Through this approach, scientists have produced new types of high-yield wheat that contain what plant breeders call "multiple minor genes" that have resistance to Ug99, the report said.

 

CBOT wheat futures also recovered recent losses to end Thursday higher, with the May contract up 6 1/2 cents at US$5.14 1/2 a bushel. The market will continue to monitor forecasts for precipitation in the dry hard red winter wheat areas of the U.S. central and southern Plains, traders said.

 

Corn also settled higher on CBOT Thursday, on overspill support from recent stability in the crude oil market and equities, along with reports of strong U.S. export sales, traders said.

 

The focus will now turn to the release of U.S. Department of Agriculture planting intentions and quarterly grains stocks reports Tuesday, with quiet trade expected until then. Traders said corn acreage might fall slightly as U.S. farmers switch to soybeans.

 

On Thursday, CBOT May corn ended the day up 5 cents at US$3.90 3/4 per bushel.