Post-holiday buying may support Asian corn and soy prices

Asian grain prices may get some support as buyers resume purchases later this week after staying on the sidelines during recent holidays, trading executives said Wednesday (May 5).

The renewed buying could be positive for prices but gains will still be limited because of the satisfactory progress of US corn and soy plantings, traders said.

CBOT July corn futures contract closed 2 1/2 cents lower Tuesday at US$3.69 a bushel, off a low of US$3.62 1/2. More than 75% of the US corn crop is likely to have been planted by early next week, and that could be positive for yields and production, traders said.

However, the oil spill in the Gulf of Mexico has the potential to disrupt shipments of grains, particularly corn from the US, they said.

Last week, the Deepwater Horizon oil rig, which energy giant BP PLC (BP) leased from Houston-based contractor Transocean Ltd. (RIG), exploded and sank. Large quantities of crude oil are still spilling into the Gulf.

More than half of the grain exports from the US are shipped through the Gulf from the deep draft ports along the Mississippi River.

Asian countries such as Japan and South Korea are heavily dependent on the US for supplies of corn and wheat supplies.

If there are any delays in shipments from the US Gulf, demand for corn from South America may increase, and could push up prices of the region's produce.

However, some traders expect CBOT futures to decline if there are shipment delays and inventories rise, as those inventories could have a negative impact on prices in the cash market.