Asia Grain Outlook on Monday: CBOT prices may stay firm on crude, dollar

  

 

The focus is shifting to a key US crop progress report scheduled for release later in the day by the US Department of Agriculture, with most analysts expecting the report to show decent crop condition ratings for US corn.

 

Estimates for the portion of the crop rated "good" to "excellent" range from 60% to 75% compared with 63% last year, when a wet spring and major delays in the central and western corn belt got the crop off to a slow start.

 

CBOT corn has rallied in recent sessions, primarily on the back of strong gains in crude oil prices. Bullish crude is considered supportive for corn, some of which is used to produce ethanol.

 

In electronic trading Monday, CBOT July corn extended Friday's strong rise. At 0648 GMT, the July corn contract was up US$2.40 at US$4.38 a bushel on eCBOT, and analysts said further gains appear likely.

 

"We expect grain prices and specifically corn prices will rally over the summer months, in contrast to seasonal norms," Deutsche Bank said in a weekly commodities report Monday.

 

"We expect the USDA's acreage report at the end of June will announce a further reduction in US corn plantings as well as lower yields staging the scene for an even tighter inventory position heading into next year," it said.

 

In other news, the state-run Food Corp. of India bought 23.8 million metric tonnes of wheat from April 1 to May 31, a government official said Monday.

 

State-run companies, including Food Corp., bought a total of 22.6 million tonnes of wheat in 2007-08 compared with 21.5 million tonnes the previous year, the official said.

 

Meanwhile, China has harvested 16% of its winter wheat crop and 91% of its winter rapeseed crop, the Ministry of Agriculture said late Sunday.