May 23, 2007

 

Asia Grain Outlook on Wednesday: Prices seen volatile on weather-led CBOT

 

 

Prices of imported grains in Asia are likely to remain volatile for the rest of this week as Chicago Board of Trade grains futures closely track U.S. weather.

 

Grains futures posted sharp gains on CBOT Monday on concerns over dry weather in the U.S. and then fell back Tuesday as concerns eased.

 

As planting of corn and soybeans gathers pace and harvesting of wheat is around the corner in the U.S., CBOT futures will be increasingly weather-driven over the next few weeks.

 

In Asia, wheat buying is likely to pick up pace over the next 10 days, as Japan, India and South Korea may become active wheat buyers.

 

South Korean flour mills are expected to buy U.S. No.1 wheat this week after rejecting all bids in a wheat purchase tender earlier this month.

 

South Korean flour mills usually buy wheat twice a month.

 

In Japan, the federal agriculture ministry is seeking to buy a total 130,000 metric tonnes of wheat, for the second week in a row, from Australia, the U.S. and Canada. The tender will be concluded Thursday.

 

India's state-run State Trading Corporation, or STC, is likely to announce the winning bids for its tender to buy 1 million tonnes of wheat over the next 10 days.

 

STC has received seven bids for its buy tender, with the total volume of bids received significantly higher than 1 million tonnes.

 

However, industry and government officials said the bids are quite high.

 

"There is no dearth of wheat offered in this tender, but prices seem to be quite high, with the highest quote around US$302/tonne," said a government official.

 

Government and trading officials varyingly put the lowest bids in the tender around US$265.50-US$267/tonne.

 

Trading in corn and soybeans is likely to remain low key this week as volatility in CBOT prices and high ocean freight costs keep traders on the sidelines.