June 10, 2010

 

 

Asian grain prices are likely to come under pressure for the rest of this week due to ample supply and limited demand, trading executives said Wednesday (Jun 9).

 

The recent declines in prices have made purchases attractive, and import deals are also being contracted for wheat, corn and soy, but the volumes aren't sufficient to prop up the market, they said.

 

December corn futures on the Chicago Board of Trade ended 1 1/2 cents, or 0.4%, higher Tuesday (Jun 8) at US$3.56 1/2 a bushel. November soy ended 5 3/4 cents, or 0.6%, lower at US$8.94 1/4. July wheat futures closed unchanged at US$4.32 1/4 a bushel.

 

"The crop conditions for corn and soy in the US Midwest region are very good and planting progress has been positive," a Tokyo-based commodities analyst said. "This may drag down prices even further."

 

Weak fundamentals are also weighing futures prices, he said.

 

Traders said that with a large soy crop in the US anticipated this year, CBOT November corn futures may soon fall to US$8.70/bushel. The fall in prices is narrowing the spread between July and November soy, they said.

 

Strong Chinese demand for tight, old-crop US soy has kept a floor under prices for some time now, but more and more bearish indicators seem to be lining up, ANZ Banking Group said in a research note.

 

China has ample soy, and physical buying is likely to be slow for the next month, a trader in Singapore said.

 

Traders estimated corn prices will fall further, with the CBOT December contract likely to weaken to US$3.50/bushel or below within the next few days.

 

Chinese corn buying touted by many market participants as a potential buttress for prices hasn't materialised so far, while the US is expected to harvest a record crop, they said.

 

Concerns last month that China would require hefty imports have eased, with expectations for an early local harvest encouraging and the government conducting ongoing auctions from its reserves, ANZ.

 

The China National Grain and Oils Information Centre said Wednesday that it expects domestic corn output this year to rise 2.5% to 168 million tonnes due to higher acreage.

 

Asian buyers are contracting some grain purchases to take advantage of the recent fall in prices, while others are waiting for a further downward move.

 

The Kaohsiung branch of Taiwan's Breakfast Soy Procurement Association Tuesday (Jun 8) bought 45,000 tonnes of Brazilian soy from Cargill Inc. at US$2.42/bushel over CBOT August soy.

 

Taiwan Sugar Corp Tuesday passed on a tender to import 23,000 tonnes of corn and 12,000 tonnes of soy, citing high prices.

 

South Korea has bought wheat cargoes for feed use after prices on a delivered basis fell below US$200/tonne.

 

Global trading companies Bunge Ltd. (BG) and Alfred C. Toepfer International GmbH have each sold 55,000-tonne cargoes of feed wheat to South Korea's Major Feedmill Group at US$198.39/tonne, on cost and freight basis, excluding two-port delivery charges of US$1.50/tonne, trading executives said Wednesday.

 

Last week, another feedmaker in South Korea, Nonghyup Inc., bought a cargo of 55,000 tonnes of feed wheat for delivery by October 10 at US$199.95/tonne, C&F, excluding second and third port delivery charges of US$1.50/tonne each.