April 21, 2008

Asia Grain Outlook on Monday: Wheat prices may rebound on strong demand

Wheat prices may stage a rebound later this week, buoyed by firm demand, after prices on the benchmark Chicago Board of Trade slumped last Friday ahead of the new winter wheat harvest in the U.S.

Chicago Board of Trade May wheat shed 43 cents to US$8.79 per bushel, down 17 1/2 cents on the week. Kansas City Board of Trade May wheat slipped 34 cents to US$9.39 3/4, down 14 cents on the week. Minneapolis Grain Exchange May wheat was down nine cents at US$12.30, down 62 cents on the week.

However, India, a major wheat producer and consumer, is facing a labor shortage in the major wheat growing states of Punjab and Haryana in the ongoing harvest season. This may delay the arrival of the new crop beyond the end of May.

On Saturday, India's federal government floated an import tender with a call option for wheat to be delivered by November, as a hedge against rising prices.

Earlier this month, the government had imported 180,000 metric tonnes of wheat from Cargill through a call option at US$406 a tonne, cost and freight.

Deutsche Bank's latest commodities report remains bullish on corn and soybean, noting in real terms corn and soybean prices would have to double and triple from their current levels to reach their all-time highs reached in 1974.