June 22, 2009

Grain prices in Asia may decline in the coming days as futures on the bellwether Chicago Board of Trade continue to face pressure from external markets, and generally bearish supply fundamentals, traders said Monday.

 

CBOT's July corn contract Friday slipped below the psychologically important mark of US$4.00 a bushel and continued to decline in Asian trading Monday. At 0615 GMT, e-CBOT July corn was trading 5.20 U.S. cents lower at US$3.94 a bushel.

 

Traders in Asia said more downside now appears likely, with a test of US$3.90 a bushel possible, with little in the way of fundamental support on the horizon though much depends on external factors, notably the crude oil market.

 

In the U.S., weather is mostly seen neutral, with ample rains and warming temperatures seen as beneficial to corn, though the market will now focus on a June 30 acreage report from the U.S. Department of Agriculture.

 

China's May corn exports rose sharply on year to 15,966 metric tonnes, according to data issued by Customs.

 

But China's less-competitive corn prices, in comparison with global prices, continue to hamper its exports. Most of China's corn exports go to North Korea as part of an aid package.

 

In India, corn exports have picked up after a slow start in the marketing year that began Oct. 1, but the entire year's export is likely to be only a third of year-ago levels at about 1 million tonnes, a U.S. Grain Council official said.

 

Traders attributed the rise in India's corn exports to the recent strength in U.S. corn price.

 

India had banned corn exports last July as part of measures to counter rising inflation in the country.

 

The ban ended in mid-October but exporters found it difficult to regain marketshare as overseas customers were wary due to reliability issues with Indian supplies.

 

In other regional grain news, wheat prices in China's major producing regions rose slightly in the week to Monday, as farmers largely stayed on the sidelines in expectation of higher prices.

 

"New wheat prices are traditionally higher in the weeks after harvesting, so farmers are hoping to get higher prices if they wait a bit," said Hai Yang, an analyst at Zhengzhou Esunny Information & Technology Co.

 

CBOT wheat futures extended Friday's losses in Asian trading Monday, with e-CBOT's July wheat contract down 2.60 U.S. cents at US$5.52 a bushel at 0615 GMT, with traders attributing wheat's recent decline to a general lack of fresh fundamental support amid increasing supply as the U.S. wheat harvest advances.