June 29, 2009

Asian grain prices may rise in coming sessions following firmer bellwether Chicago Board of Trade futures, though thin trade is expected with the market now focusing on a key U.S. Department of Agriculture acreage report due this week.

 

CBOT futures recovered from recent losses to settle mostly higher Friday, while all contracts, except corn, extended gains into Asian trading Monday.

 

Still, volumes were thin ahead of the USDA report and gains were mostly attributable to external factors - notably the recent weakness in the dollar - amid a generally negative U.S. export outlook, traders said.

 

In Asian trading Monday, e-CBOT wheat posted moderate gains following Friday's rise. At 0625 GMT, the July contract was up 3.20 U.S. cents at US$5.37 a bushel.

 

In Australia, ongoing favorable weather in Queensland state has helped underpin a favorable outlook for winter crop production, including wheat, according to a statement issued Monday by farmer lobby AgForce.

 

Growers in southern Queensland are particularly excited about the prospects, with some districts enjoying their best season in more than two decades. The government's Australian Bureau of Agricultural and Resource Economics has previously estimated Queensland will produce 1.8 million metric tonnes of wheat this crop year of a 22.0 million tonnes national crop, most of which is available for export.

 

In China, wheat prices rose in the week to Monday, with farmers now reluctant to sell amid expectations prices may rise further still in coming weeks, while the market also found support from reports suggesting the China Grain Reserves Corp. began buying the commodity for state reserves.

 

China's wheat prices usually rise after the harvest on the back of the government's minimum purchase price program, said China National Grain and Oils Information Center.

 

Last week, China's government sold 263,600 tonnes of old wheat it had earlier purchased under the minimum purchase price program, or 18% of the 1.49 million tonnes it planned to sell.

 

In other regional wheat news, Japan's Ministry of Agriculture, Forestry and Fisheries Friday said it bought 44,362 metric tonnes of Canadian- and Australia-origin wheat in a simultaneous buy and sell, or SBS, tender concluded late-Thursday. Under the SBS system, consumers can negotiate as a group on the price and quantity before submitting their bids via the Agriculture Ministry.

 

Meanwhile, South Korea's Daehan Flour Mills said it had purchased 25,300 metric tonnes of U.S. wheat from Columbia Grain International in a tender concluded Friday.