Asian grain prices may fall in next few weeks

Asian grain prices are likely to remain steady this week, but may weaken going forward due to ample supply, according to trading executives.

 

"At present, many growers are busy with planting, so sale offers from the US are limited, but a few weeks from now the supply pressure will be evident," a Tokyo-based executive at a global trading company said.

 

Within the next month, corn prices may fall below US$3.50 a bushel, he said.

The July corn futures contract on the Chicago Board of Trade closed 6 1/2 cents higher at US$3.77/bushel Tuesday (May 11).

 

Prices are currently on the high side because barge rates are high in the US, while in the futures market, investors have been covering their short positions, many of them to cut losses. But the high prices may be unsustainable because of excellent progress in planting and lack of frost in sown areas, a commodities analyst in Singapore said.

 

Traders said that, between March 31 and May 20, the general trend is to observe the progress of planting.

 

"With good progress, many investors are expected to go short again on the futures market," a second trader in Singapore said.

 

The Tokyo-based executive said prices of soy are expected to decline below US$9.00/bushel by next month. CBOT November soy futures ended 2 3/4 cents, or 0.29%, higher Tuesday at US$9.37 1/2 a bushel.

 

The South American soy crop this year is 40 million tonnes larger than in 2009, a large difference considering that China imports around 44 million tonnes of soy each year.

 

Although Chinese demand is likely to rise due to adverse weather in soy planting areas in the northeast, such as Heilongjiang province, global supply is ample to meet China's requirements.

 

US soy planting has been progressing well, and the country will have difficulty selling the crop after the harvest in October due to the large stocks in South America, the Singapore-based analyst said.

 

Traders expect wheat prices to fall below US$4.50/bushel in the next few weeks. The July CBOT wheat futures contract ended 1/2 cent higher Tuesday at US$4.93 1/4 a bushel.

 

Global wheat trade in the marketing year ending June 30 is projected at 127 million tonnes, down from 143 million tonnes the previous year, according to the latest report by the USDA. US exports are estimated at 23.5 million tonnes, down from 27.6 million tonnes.

 

Traders said global inventories are high and will weigh on prices.