June 26, 2006

 

Asia Corn Outlook: Premiums may swing either way

  

 

Premiums for wheat and corn delivered to Asia may swing either way as Chicago Board Of Trade futures seem evenly poised for both commodities.

 

Over the last week, CBOT soy and wheat futures had a mixed run, with weather and export demand dominating market direction.

 

This week, weather conditions for the developing U.S. corn and soybean crop could prove to be key determinants of price action.

 

In the wheat market, CBOT traders will be eyeing India, where state-run State Trading Corp. is likely to announce Wednesday the names of bidders who have technically qualified for its 2.2-million-metric-tonne wheat import tender, bidding for which concluded last week.

 

According to a report in India's Financial Express newspaper, most of the bidders are offering U.S.-origin wheat, which could see a sharp jump in wheat sales from that country.

 

In India's two previous wheat import tenders, AWB Ltd. (AWB.AU) got most of the orders, but it didn't participate in the current tender.

 

Meanwhile, in an attempt to rein in growing inflation, India's federal government last week announced it will allow duty-free imports of wheat by private millers.

 

Previously, only State Trading Corp. was allowed to import wheat duty-free, while private millers had to pay a 50% import duty.

 

Traders will be allowed to import duty-free wheat until March 2007, when the decision may come up for review.

 

It was an exceptionally quiet week in Asia's corn market, with no major import deals reported from either Taiwan or South Korea.

 

A trader in Seoul said this week may also be a quiet one for South Korean corn buyers, who are comfortably stocked right now.

 

However, the trader said corn buying may resume after a gap of 1-2 weeks, as traders would likely start buying for October shipment.

 

In Taiwan, at least one deal is expected this week, as Taiwan Sugar Corp. is expected to conclude a tender Tuesday to purchase 25,000 tonnes of U.S.-origin corn.

 

The wheat is scheduled for July-August shipment.

 

In other news, Pakistan's 2006 wheat crop has turned out much better than expected, at 21.7 million tonnes versus 22 million tonnes in 2005.

 

In April, Pakistan's government had said wheat output may fall to 20.5 million tonnes, largely because of heavy rains in the chief wheat-growing Punjab province.

 

Wheat harvesting in Pakistan concluded in April.