April 16, 2007

 

Asia Grain Outlook on Monday: Wheat, corn prices to rise on US weather

 

 

Imported wheat prices in Asia should continue to rise in the week ahead, as Chicago Board of Trade wheat futures should continue their gains.

 

In the U.S., recent freezing weather has damaged wheat crops, although farmers are still trying to ascertain the extent of the damage and how much of it will be reversible once the weather warms.

 

CBOT corn futures too should see support from cold and wet conditions hindering crop planting in the U.S. In Asia, Chinese traders continued to buy soybeans at a brisk pace over the past week, buying around eight cargoes, all from Argentina, said commodity analysis firm JCI Shanghai.

 

The premium for soybeans delivered to China from Argentina is between 130 U.S. cents-142 cents/bushel to the CBOT July contract, for shipment in May or June.

 

This week, South Korean feed companies should step up their corn imports, with two major feed buying groups Major Feedmill Group and the Korea Feed Association jointly planning to buy 500,000 metric tonnes of corn in a single tender.

 

The tender is expected to be announced sometime this week, and will likely specify shipments to be delivered in South Korea from October onward.

 

According to traders, importers want to take advantage of current lower prices in corn, to stock-up on their future needs.

 

Besides, traders added that the Chinese government may soon issue corn export quotas of 3 million tonnes, which would further help South Korean buyers in procuring cheaper corn.

 

Chinese corn is generally US$8-10/tonne cheaper than U.S. corn.

 

JCI said in a report last week the Chinese government may initially issue corn export quotas of 1.2 million tonnes soon, and release more quotas later.

 

Chinese traders can't export more corn than amounts specified by state-set quotas.

 

In grain import deals last week, Taiwan's Members Feed Industry Group bought 60,000 tonnes of U.S. corn.

 

The premium for U.S. corn delivered to Taiwan is around 167 U.S. cents/bushel to the CBOT July contract, for shipment in May and June.

 

The Korea Corn Processing Association, or Kocopia, bought 110,000 tonnes of optional-origin corn from trading house Louis Dreyfus last week.

 

If the corn is of U.S. or South American origin, it will be supplied at US$233/tonne, while corn of Chinese origin will be supplied at US$223/tonne.

 

In wheat, Japan's Ministry of Agriculture, Forestry and Fisheries bought a total of 145,000 tonnes of wheat from the U.S., Canada and Australia in a tender last week.