March 31, 2010

 

Asia Grain Outlook on Wednesday: Higher acreage may weigh on corn prices

 

 

Asian corn and soybean prices may come under downward pressure due to an expected substantial rise in acreage in the U.S., trading executives said Wednesday.

 

The U.S. Department of Agriculture is likely to release its planting intentions report later tonight.

 

"The general perception is that there will be a large shift toward corn and soybeans, and this can pull down prices," said a Tokyo-based analyst with a commodities brokerage.

 

He said the shift toward planting of corn and soybeans is likely to be prompted by the huge stockpile of wheat in the U.S.

 

The May corn contract on the Chicago Board of Trade ended 2 1/2 cents lower Tuesday at US$3.54 1/2 bushel and July corn closed down 2 1/4 cents at US$3.66 a bushel.

 

Traders expect prices to fall toward US$3.20 a bushel by May.

 

CBOT May soybean futures settled 6 1/2 cents or 0.67% higher Tuesday at US$9.74 a bushel.

 

Traders said soybean and soymeal prices have gained due to a strike by dock workers in Argentina over a demand for higher wages.

 

However, fundamentals are weak and prices may fall again, they said.

 

Until late last week, South American soymeal was being offered at US$282/tonne, free-on-board, but prices have now risen above US$304/tonne, said a Singapore-based exporter.

 

He said due to the strike, many exporters in Argentina are on the sidelines and hoping for the deadlock to be broken, but indicative prices are unlikely to be less than US$385/tonne, basis cost and freight for Southeast Asian destinations.

 

Traders said some deals have taken place for forward-month shipments on the hope that the strike will end soon but still deliveries are likely to be delayed.

 

South Korean importers have purchased 110,000 tonnes of soymeal of Argentine origin at US$335/tonne on a cost and freight basis for shipment during the Sept. 1-20 period.

 

Despite the strike at Argentina's ports, importers want to buy soymeal from there because it is cheap and easily available in ample volumes, said a Singapore-based trader.

 

Brazil and the U.S. mostly export soybeans directly, while India's soymeal prices are very high, he said.

 

In other news, buyers in Vietnam have rejected a cargo each of Indian corn and soymeal, citing low quality. The cargoes comprised around 12,000 tonnes each, said trading executives.

 

Traders said the rejected soymeal cargo was sold by a soybean processing and exporting company in India's central Madhya Pradesh state and was priced around US$435/tonne, C&F.

 

After being rejected, the cargo ended up being resold in Vietnam at a US$20/tonne discount.

 

Buyers in Vietnam sometimes cite lower quality to reject cargoes and agree to buy the same cargo at a discount, said an executive at a global trading company.