June 5, 2009

Grain prices in Asia are likely to stay firm in the days ahead, with the bellwether Chicago Board of Trade expected to continue to find support from bullish external factors and strong fundamentals, traders said Friday.

 

However, despite generally robust demand there are now signs some Asia-based importers are beginning to slow down on purchases amid the recent spike in prices.

 

"We're looking to buy Panamax cargoes of wheat, corn and soybeans from the U.S. for delivery in October, but we are monitoring the market for now; if prices dip we will step in and likewise if prices show signs that they will continue on the uptrend, then we will obviously have to consider the options too - we're on the sidelines for now, watching where the market is going," said a trader with a major South Korean grain importer.

 

Two South Korean flour millers, however, did purchase a combined 47,800 metric tonnes of U.S wheat in tenders completed late Thursday, traders from both companies said.

 

In the first purchase, Daehan Flour Mills bought 25,800 tonnes of U.S. wheat from Cargill while the second, for 22,000 tonnes, was made by a group of South Korean flour millers led by Dongah, they said.

 

"We are now covered until September but we will continue to monitor the market for favorable prices in the meantime and may issue further tenders accordingly," said the Daehan trader.

 

This week, CBOT wheat futures hit eight-month highs in a rally some market participants viewed as overdone, though despite a selloff Wednesday wheat rebounded strongly Thursday.

 

In Asian trading Friday, e-CBOT July wheat was down 2.00 U.S. cents at US$6.33 a bushel though Asia-based traders said the downside potential was likely to remain limited due to firm crude oil prices and steady U.S. export data.

 

The U.S. Department of Agriculture said weekly U.S. wheat exports for the week ended May 27 totaled 265,400 tonnes, well within previous trade estimates of 100,000-400,000 tonnes.

 

In other Asia grains news, Vietnamese rice exporters have asked the government to raise the export quota for rice this year by 20% to 6 million tonnes due to high output, the state-run Voice Of Vietnam Radio reported Thursday.

 

Earlier this year, Vietnam's government set an export quota of 5 million tonnes for rice, up from 4.7 million tonnes in 2008.

 

Meanwhile, rice farmers in the Philippines will be given access to three new varieties of rice that could help the country slash imports and produce more at home, a research group said this week.

 

The International Rice Research Institute developed the varieties, one of which can withstand floods, while another can survive drought; the third has high salt tolerance.

 

The Philippines is the world's biggest rice buyer.