Grain prices in Asia may fall amid stronger US dollar

Asian grain prices are likely to be under downward pressure for the next few days due to a lack of buying interest, the stronger US dollar and the upcoming winter wheat harvest, according to trading executives.

 

They said many buyers across Asia are either not finalising deals or contracting only limited purchases of corn and wheat in anticipation of a decline in prices.

 

July corn futures on the Chicago Board of Trade settled at US$3.64 1/4 a bushel Tuesday (May 25), down 6 3/4 cents or 1.82%. They may soon fall to US$3.50 a bushel, said a Tokyo-based trading executive.

 

Sentiment is also bearish for wheat due to the upcoming harvest in the US, Europe, Russia and neighbouring countries. This has resulted in the cancellation of some recent tenders.

 

South Korea's Nonghyup Feed Inc., or NOFI, has passed on a tender to import around 55,000 tonnes of feed wheat, citing higher prices.

 

The lowest bid in the tender was from Concordia, at US$205.87/tonne, but NOFI wanted to make the purchase at a price benchmarked against contracts on the Chicago Board of Trade, they said.

 

The general perception in the market is that CBOT wheat futures are likely to decline over the next few months, and this could make purchases benchmarked against futures contracts cheaper.

 

CBOT July wheat futures settled 7 cents, or 1.5%, lower Tuesday at US$4.60 1/2 a bushel.

 

Japan's agriculture ministry Wednesday (May 26) passed on a tender to import 30,000 tonnes of feed wheat and 200,000 tonnes of feed barley in a sell-buy-sell tender. It is rare for an SBS tender in Japan to be cancelled due to a lack of bids or offers.

 

Under the SBS system, end-users can negotiate as a group on the price, quantity and origin of grains before submitting bids to trading firms via the agriculture ministry.

 

Global soy prices are under pressure because of excessive shipments to China in May and good progress in US plantings.

 

Traders expect China's soy imports in June to be low and domestic crushing to be high. Crushing of these surplus beans over the next few months is likely to increase the supply of soymeal. This is also dragging down the soymeal premiums over CBOT futures.

 

CBOT July soymeal futures ended US$2.60, or 0.95%, lower Tuesday at US$271.10 per short tonne. "Near-term projections for soy and soymeal are bearish," said an analyst in Singapore. CBOT July soy futures settled 10 cents, or 1.06%, lower Tuesday at US$9.30 1/2 a bushel. Analysts expect prices to fall below US$9.10 a bushel soon.

 

Taiwan has purchased soy for July-August shipment at 224 cents and 226 cents over the CBOT July futures contract.