May 12, 2008

 

Asia Grain Outlook on Monday: Corn may gain on US rains forecast

 

 

Corn prices are likely to stay high this week, as rains are forecast in U.S. corn growing regions, which may further delay planting.

 

Chicago Board of Trade corn futures are largely weather-driven right now as U.S. corn planting is underway.

 

On the other hand, wheat futures are likely to fall in the week ahead as several reports over the past few months have been pointing to record world wheat output this year.

 

Friday, the U.S. Department of Agriculture said world wheat output (production and stocks) is expected to rise to a record 656.01 million metric tonnes from 606.4 million tonnes a year earlier. The previous record was 628 million tonnes.

 

However, the record crop is depends on good weather conditions in major wheat growing nations.

 

On that front, some bad news is already emerging in Australia, a major wheat producer and exporter.

 

Michael Coughlan, head of the national climate center at Australia's Bureau of Meteorology, Friday didn't rule out a repeat of drought in Australia, which could reduce production and exports of wheat.

 

Australian farmers are expecting to harvest 27 million tonnes of wheat this year, more than double last year's drought-ravaged crop, though it critically depends on timely rains. The wheat crop will be harvested from October to December.

 

In other grains, the U.S. Department of Agriculture said Friday night that Myanmar's milled rice production this year may fall by 7% on year to 10 million tonnes as a result of cyclone Nargis.

 

However, the USDA said the agency is monitoring the situation in Myanmar and may revise its estimate in its next report due in June.

 

It added that the cyclone will delay sowing of Myanmar's major crop, which should normally begin next month with the onset of monsoon rains in South Asia.

 

The USDA said farmers in Myanmar may face a shortage of rice seeds for planting, while encroachment of salt water in farms may reduce the productivity of land and in some cases render the land uncultivable.