Soy and wheat prices in Asia likely to ease

Grain prices in Asia are likely to ease over the next few days on fresh selling in the futures market and spill over pressure from other asset classes, said trade participants.

"There is a strong downside risk in the grains market this week," said a Singapore-based commodities analyst.

He said recent purchases of corn by China have already been priced in by the market and recent uncertainties over the fate of the European economy are also causing a lot of consternation.

The July soy futures contract on the Chicago Board of Trade may test US$9.35 a bushel this week, said a Tokyo-based trading executive. CBOT July soy futures, which is also the most-active contract, settled 11 cents or 1.14% lower Friday (May 14) at US$9.53 1/2.

Traders said the downward trend is likely to continue even though there is strong demand from China. This is because of the ample supply available from South America to meet demand.

They said unless fresh physical purchases are made by China and South Korea, prices of corn also may head southwards. Most traders expect CBOT July corn futures to test US$3.55/bushel. The contract ended 10 cents lower Friday at US$3.63/bushel.

"Ample stocks are available with exporters to meet physical demand for corn," said another trader in Japan. He said there has been a considerable strengthening of the US dollar against other currencies. This has made exports of US grains cheaper.

Wheat may also follow corn and soy lower, said the analyst in Singapore. Most traders expect CBOT July wheat prices to fall toward US$4.65/bushel over the next several days from Friday's closing of US$4.91.