June 18, 2008

 

Asia Grain Outlook on Wednesday: Corn, soybean prices may keep rising

 

 

Corn and soybean prices are likely to keep rising the rest of this week as U.S. crop damage from Midwest floods continues to push up Chicago Board of Trade grain futures.

 

A U.S. Department of Agriculture report Monday gave a bleak picture of the U.S. corn and soybean crop, with the current state of the corn crop rated the lowest since 1996 and that of the soybean crop rated the lowest since 1993.

 

In Asia, corn buyers are trying different strategies to tackle the higher price of corn.

 

South Korean feed buyers are actively considering replacing corn with feedwheat, even though they have enough stocks until November.

 

In Taiwan, however, corn imports are likely to remain around the 4 million tonne level, as in previous years, even as some feedmillers are replacing some amounts of corn with feed barley and sorghum.

 

"Since 60% of all feed produced uses corn as a base, its quite tough to replace it," said a Taiwanese feed industry official.

 

He added, however, that Taiwanese feedbuyers are seeking to buy more corn from China and India rather than their dominant supplier the U.S., as the lower freight cost provides some cost savings to the buyers.

 

At present, the landed cost of Indian corn in Taiwan is US$20-US$30/tonne cheaper than U.S. corn.

 

However, the official said that how much corn Taiwan eventually buys from these countries will depend on how much supply these countries can make available for exports.

 

G.K. Pillai, India's commerce secretary, said Tuesday the country has no plans to ban corn exports. India is also expected to sow a larger area to corn this year as farmers are encouraged by high prices. Sowing of corn has already begun.

 

Pillai also said India's ban on exports of white rice will be reviewed only after the country's paddy harvest concludes in October and November.

 

In other rice news, the Philippines has bought 600,000 tonnes of Vietnamese rice at an undisclosed price, bringing the country's total imports this year to 2.3 million tonnes.