May 22, 2009

Asian grain prices may stay mixed in coming sessions as the market continues to focus on external factors amid a continued lack of firm fundamental direction, traders said.

 

On the bellwether Chicago Board of Trade, wheat futures settled mostly lower Thursday in choppy trade, with the July contract down 4 1/4 cents at US$5.93 1/2 a bushel, weighed down primarily by slightly weaker crude oil and equities, traders said.

 

Weekly U.S. wheat export sales of 563,500 metric tonnes, however, were above previous expectations, which ranged from 200,000 tonnes to 450,000 tonnes, and that could help underpin sentiment, market observers said.

 

In Australia, widespread rainfall at the tail-end of this week, particularly in the northern and eastern areas of the region's wheatbelt, has sparked planting of winter crops, including wheat, industry participants said.

 

The current forecast of the Australian Bureau of Agricultural and Resource Economics for wheat production this crop year is 22.1 million tonnes, up from an actual 21.4 million tonnes last crop year.

 

In India, rising warehouse stocks of wheat, which are now outweighing actual demand, could keep prices under pressure, in the near term at least, traders said.

 

CBOT rice prices, meanwhile, rose slightly Thursday, with July rice up 1 1/2 cents at US$12.12 1/2 per hundredweight. Concerns about the crop in Arkansas following recent unfavorable weather underpinned market sentiment, traders said.

 

In Australia, the rice crop harvested in autumn 2009 will yield 65,000 tonnes, compared with 19,000 tonnes in 2008, which was the smallest harvest since 1928, according to the Grains Report issued Friday by the New South Wales Department of Primary Industries.

 

The harvest is almost complete, but is below early expectations with a record heat wave in late January/early February damaging crops, particularly the long grain rice type and early-sown crops, it said.

 

High supply and expectations of an increase in rice production in 2009-10 in Asia may cap the upside potential for rice prices, market participants said.

 

Thailand is expected to unload some of its government intervention stocks into the market, with the USDA projecting exports of 8.5 million tonnes in 2009-10; the country was a net importer in 2008-09.

 

Meanwhile, India is expected to lift its export ban and start releasing stocks back into the market.

 

"They (Thailand and India) are sitting on it, they're still not selling it much yet, but eventually they're going to have to," said Jack Scoville, vice president of Price Futures Group.

 

Soy prices in China's major producing areas rose in the week to Friday, supported by a higher futures market as a rally in soy futures on the Chicago Board of Trade boosted expectations of higher domestic prices, as rising import costs may make local soys more competitive, said analysts.

 

CBOT's July contract Thursday settled 6 cents higher at US$11.75 a bushel.

 

CBOT's July corn contract ended down 2 cents at US$4.24 a bushel Thursday, with recent concerns over supply in the U.S. easing due to a recent string of warm, dry weather in the central and eastern corn belt, market observers said.

 

Meanwhile, private exporters reported to the U.S. Department of Agriculture this week export sales of 116,000 tonnes of corn for delivery to South Korea in the 2009-10 marketing year.