May 21, 2008

 

Asia Grain Outlook on Wednesday: Wheat prices may stay low on fundamentals

 

 

Wheat prices are likely to remain low in the rest of the week on bearish fundamentals.

 

Global wheat production is expected to hit an all-time high this year, as high prices have prompted more plantings around the world.

 

However, the weather continues to remain a source of worry in Australia, a major wheat exporter.

 

While there have been rains in Victoria, dryness in New South Wales is causing worries.

 

"With little rain to speak of on the 14-day weather forecast, sowing will start to be pushed past the traditional optimum window in the drier areas, which has some people with their hearts in their mouths," Australian agribusiness GrainCorp Ltd. said in a statement Tuesday.

 

Dryness in the coming months could reduce Australia's wheat output, which is widely expected to hit 26 million metric tonnes this year, more than twice last year's drought-ravaged crop.

 

Rice supplies could improve in Asia, as Japan, which has a stockpile of 2.6 million tonnes, is considering the release of some of its stocks, the Asian Wall Street Journal said Wednesday.

 

Juan Jose Daboub, managing director of the World Bank, Tuesday urged rice exporters in Asia to release 1 million tonnes of additional rice into the international markets as soon as possible to send a reassuring signal to the market about adequate rice supply.

 

Japan is already in talks with the Philippines to sell 50,000 tonnes of homegrown rice. It may also send 200,000 tonnes from its imported rice reserves to the Philippines as aid, while shipments to other countries may follow, Japan's Deputy Agriculture Minister Toshiro Shirasu told reporters this week.

 

However, there's discouraging news from another major rice exporter - Vietnam, whose exports will decline 29% on year in May and June to about 700,000 tonnes, according to local media reports.

 

The country plans to export 430,000 tonnes in May and 250,000 tonnes in June.

 

In other commodities, Asian corn buying will likely remain subdued during the rest of this week, as traders in Japan and South Korea - Asia's biggest corn importers - stay on the sidelines because of high U.S. corn prices and soaring ocean freight costs.