Asia's wheat prices to stay steady on strong sales

Asian wheat prices are likely to remain steady in range bound trade early this week while exporters try to make big sales to take advantage of the recent rally, trading executives said Friday (May 7).

 

"We don't expect much price movement to take place over the next few days and prices should hold around current levels," a Singapore-based trading executive said.

 

Sentiment may turn bearish in the next few months, but prices are expected for expected to be steady for three-four days, despite the selling pressure, as new supply is not reaching the market yet.

 

"The pressure of the summer harvest of wheat in Europe and North America is expected only from mid-June, but we don't expect any significant correction now," said a Tokyo-based executive at a global trading company.

 

Buying should also be supported by a return to the market from recent holidays, but prices will still most probably move sideways, the Singapore-based executive said. Exporters are trying to sell the maximum possible volumes before there is any downward correction in high prices on the Chicago Board of Trade.

 

The July wheat futures contract on the Chicago Board of Trade ended 3 3/4 cents, or 0.7%, lower Thursday (May 6) at US$5.08 1/4 a bushel.

 

It does not look like prices will be sustained above US$5.0/bushel, as selling pressure is weighing on the market, said Scott Briggs, agricultural commodities strategist with ANZ Banking Group.

 

US dark northern spring wheat is now quoted at 170 cents over CBOT July futures, compared with 200 cents last month, but FOB prices are little changed at US$260/tonne.

 

After a two-week hiatus, Japan is likely to resume purchases of wheat this week, and may tender for a combined volume of anywhere between 150,000 tonnes and 200,000 tonnes from Australia, Canada and the US

 

According to traders in Japan, offers from Western Australia are limited and this is keeping prices steady. Australia has ample supplies but Japan sources most of its requirements from the west of the country. Australian Standard Wheat from Western Australia is quoted around US$230/tonne, FOB, traders in Japan said. There are concerns that dry weather may affect Australia's next wheat crop.

 

Traders are also sceptical about India and Pakistan turning into major wheat exporters. A month ago, Pakistan did announce plans to export 2.0 million tonnes of wheat, but its prices are not competitive and sales will be difficult without government subsidies. Meanwhile, India's wheat crop may eventually turnout to be around 5% below earlier projections, due to scorching heat at the time of harvest.