Grain prices in Asia may fall on sluggish buying

Asian grain prices are likely to remain under downward pressure for the rest of the week, and may fall by up to 20 cents a bushel due to sluggish demand in the physical market and favourable weather in the US.

 

December corn futures on the Chicago Board of Trade closed 4 3/4 cents lower Tuesday (Jun 1) at US$3.75 1/4, while the November soy contract ended five cents, or 0.55%, lower at US$9.02 3/4. July wheat ended seven cents, or 1.53%, lower at US$4.50 3/4.

 

The weather during planting in the US has been the main focus for grain traders in recent weeks, and with conditions now near-perfect, prices are likely to fall even further, Genichiro Higaki, head of the proprietary fund management team at Sumitomo Corp. in Japan, said.

 

If the weather continues to support planting, CBOT December corn futures may fall to US$3.00/bushel in the next two to three months, while November soy may weaken to US$8/bushel.

 

Traders said a 10-20 cents/bushel decline in grain prices is likely over the next few days.

 

"One fallout of the expected decline in grain prices is that importers aren't in a hurry to make any physical purchases," a Tokyo-based trading executive said. He said many importers are living from hand-to-mouth due to the potential for the market to weaken further.

 

Japan's agriculture ministry did not get any bids in a sell-buy-sell tender to import 30,000 tonnes of feed wheat and 200,000 tonnes of feed barley for shipment between June and August. A tender for the same quantity failed to elicit any response from traders last week.

 

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

 

Asian traders do not expect the USDA's monthly report, to be issued next week, to show any significant changes in supply and demand.

 

A better picture on the upcoming US production will emerge from the crop acreage report, expected to be ready by the end of June, and which may be bearish, they said.