June 4, 2007

 

Asia Grain Outlook on Monday: Prices ease on lower freight; weather key

 

 

Prices of imported grains in Asia started the week slightly lower on cheaper freight costs as shipping demand eased ahead of public holidays in Asia and Europe last week.

 

"There has been a slight easing of congestion due to the scheduling of shipments to arrive prior to the recent public holidays in Europe and Asia, so there is a temporary fall in demand and increase in supply (of ships)," said Alex Harkess, director of shipping service provider Clarkson Asia in Singapore.

 

Cash prices of soybean from the U.S. and Brazil at Chinese ports remained little changed over the past week at a range of RMB3250-3300/tonne.

 

However, prices could move up again, particularly if weather forecast in the U.S turn unfavorable in the coming weeks, traders said.

 

Prices for corn and soybean will remain volatile over the next two months as traders look to weather forecasts for price indications during the growing season, they said.

 

Chicago Board of Trade corn futures ended lower Friday on profit taking ahead of the weekend and favorable weather forecasts for the eastern Corn Belt that triggered a selloff.

 

Meanwhile, U.S. wheat futures climbed to new contract highs Friday on fears about tight global supplies.

 

The International Grains Council said last week total grain production this year will remain unchanged at 1.66 billion tonnes, but is still lower than expected global demand of 1.68 billion tonnes.

 

The IGC increased global grain demand forecast by 10 million tonnes from the previous month's forecast because of a bigger-than-expected rise in maize used for ethanol production.

 

CBOT July wheat rose 3.75 cents to US$5.21/bushel. India's State Trading Corp canceled last Wednesday a tender to import up to 1 million tonnes of wheat on high offer prices.

 

"India is in a Catch-22 situation because their tender is timed for mid-harvest. If they agree to import wheat at high prices, they will jack up the prices of domestic wheat. They should tender to buy at the end of their own crop season, towards the end of July," said a Singapore-based analyst.

 

In Japan, the Ministry of Agriculture, Forestry and Fisheries bought 25,000 metric tonnes of wheat in a tender concluded last Thursday, said an agriculture ministry official. The wheat is scheduled to arrive in July.

 

Overall, trading for corn was light on Monday as the Cost-and-Freight premiums remained high even after a slight dip, said a Singapore-based trader. Premiums for September delivery from the U.S. and Brazil ranged from US$1.90 to US$1.95 per bushel, down from US$1.95 to US$2.00/bushel a week ago.

 

In Korea, the Seoul branch of the Korea Feed Association bought 110,000 metric tonnes of U.S. corn from trading house Cargill in a recently concluded tender, an association official said Friday.

 

The corn will be supplied at US$220.95 per metric tonne with delivery due in November.

 

Lower freight rates brought major soybean buyers back in to the market with Taiwan's Breakfast Soybean Procurement Association buying 58,000 metric tonnes of Brazilian soybean from trading house Bunge in a tender concluded last week.

 

The soybean will be supplied at a premium of US$1.47 a bushel to the CBOT September contract, according to a trader in Taipei.

 

Sellers are currently offering a premium over the September CBOT soybean contract, ranging from US$1.50/bushel to US$1.55 for panamax cargoes. This is lower than last month's premium of US$1.57/bushel and mainly due to a recent fall in freight costs, said traders.