May 29, 2009

Wheat prices in Asia are expected to stay firm in the days ahead following strong recent gains in Chicago Board of Trade wheat futures - which rose overnight to their highest levels since January - but traders said the recent spike in prices could damp buying interest in the region.

 

On Thursday, CBOT July wheat rose to a high of US$6.4500 per bushel before ending the session at US$6.3050.

 

Though wheat declined in electronic trading on the e-CBOT in Asia Friday - at 0315 GMT, the July contract was down 3.25 cents at US$6.2725/bushel - the grain should continue to find support from concerns surrounding the U.S. winter wheat crop, delays in planting of spring wheat in the northern U.S., and a lack of rain in Western Australia's wheatbelt, market observers said.

 

However, the recent rise in wheat prices is beginning to curtail interest from Asia-based importers, and buying interest may remain muted until the market begins to stabilize, traders said.

 

Japan's Ministry of Agriculture, Forestry and Fisheries said Thursday it had bought 71,000 metric tonnes of wheat from the U.S. and Australia in its regular weekly tender, having initially sought 91,000 tonnes. Last week, Japan bought 81,000 tonnes.

 

In Australia, dry weather in the country's Western wheatbelt could leave grain production below average, in a range of 8 million to 11 million metric tonnes, Cooperative Bulk Handling Ltd. Operations Manager Michael Musgrave said this week.

 

Recent rains that fell mostly in Western Australia's northern and eastern areas have helped spur sowing of crops there, but largely missed about one third of the state's wheatbelt, in the southeast.

 

"Those areas still need significant rain...We're thinking below-average production at this point in time, but obviously it's a long way to go yet," said Musgrave.

 

Western Australia's wheat harvest takes place in November and December.

 

In other regional grains news, the Philippines' rice imports for the year may reach 2.2 million metric tonnes, slightly lower than last year's record 2.3 million tonnes, an individual privy to the government's rice import program said Friday.

 

Increased local rice production and softer global prices have eased the pressure on the Philippines to import more rice this year.

 

The state-owned National Food Authority has so far signed contracts to import 1.5 million tonnes of rice from Vietnam, while private-sector importers have indicated that they intend to import a combined 120,000 to 150,000 tonnes.