June 20, 2007

Asia Grain Outlook on Wednesday: Prices may fall as US weather to improve

Asian grain prices may fall in the remaining part of this week, as chances of rains have improved in U.S. crop growing regions.

In Tuesday's trade, corn, wheat and soybean futures took a sharp dive on the Chicago Board of Trade, on forecasts that rains may improve in coming days in grain growing regions of the U.S.

On a longer-term note, analysts believe that U.S. corn prices may hover around a moderate price level of US$4.20/bushel over the next several months, unless gasoline prices rise sharply.

Corn is the main feedstock used to produce ethanol in the U.S., and if corn prices rise any further, ethanol production could decrease as it would become economically unviable.

Tuesday, benchmark CBOT July corn settled 20 cents lower at US$3.96 per bushel.

In Asia, Chinese soybean prices in the domestic market are unlikely to face much pressure even when the harvest season starts in September, because of the overall reduction in acreage, analysts said.

Domestic soybean prices will likely rise further to RMB3,100-RMB3,200/tonne before September, and will be supported at the current level of around RMB3,000/tonne for the rest of this year.

In import deals expected this week, Japan's Ministry of Agriculture is likely to import 93,500 tonnes of wheat from the U.S., Australia and Canada in a tender to be concluded on Thursday.