June 27, 2007

 

Asia Grain Outlook on Wednesday: Corn prices may fall further on weak CBOT

 

 

Prices of imported corn in Asian markets may continue to fall in the remaining part of this week, tracking a downtrend in Chicago Board of Trade corn futures.

 

Additionally, good rains and expectations of record high corn planting in the U.S. will likely continue to pressure prices.

 

U.S. corn planting is currently underway, and acreage is estimated to total 90.585 million acres in 2007, according to a survey of 20 analysts by Dow Jones Newswires. This compares to the U.S. Department of Agriculture's March estimate of 90.454 million acres, and is sharply higher than the 78.327 million acres planted in 2006.

 

Meantime, Asian corn imports are gathering pace, as lower corn prices have drawn traders to the market.

 

Tuesday, South Korea's Korea Feed Association awarded one of Asia's biggest corn import tenders so far this year. KFA bought a total of 385,000 metric tonnes of U.S. corn from four trading houses - Bunge, Noble, Archer Daniels Midland and Toepfer - for October and November shipment at US$228-US$231/tonne, cost and freight basis.

 

In another major announcement Tuesday, India's state-run State Trading Corporation, or STC, said it is seeking 1 million tonnes of wheat in a tender to be concluded on July 4.

 

STC had earlier canceled all bids in a tender to purchase 1 million tonnes of wheat in May, as it deemed bids to be too high.

 

Japan's Ministry of Agriculture is also seeking to buy 127,000 tonnes of wheat from the U.S., Australia and Canada in a tender to be concluded later Wednesday.

 

Meantime, grain traders and ship brokers across Asia are gathering for the Grain Shipping Conference in Singapore on Thursday and Friday. The conference is expected to discuss rising ocean freight rates for shipping grains to Asia, and the likely trend for freight rates in the remaining part of the year.

 

Ocean freight costs have been rising since early this year, due to high demand for iron and coal from China. Port congestion in Australia and Brazil have also lowered ship availabilty, as loading and unloading at these ports now take longer.