July 2, 2007

Asia Grain Outlook on Monday: Wheat, soybeans likely to gain on CBOT

Prices of wheat and soybeans imported to Asia are likely to rise in the week ahead, tracking expected gains in Chicago Board of Trade futures.

According to a much-watched U.S. Department of Agriculture crop report released last week, wheat acreage in the U.S. is likely to be lower than trade expectations, while soybean acreage is likely to fall sharply on higher corn planting.

Globally, the stock situation for both wheat and soybeans looks tight, which may keep these commodities well-supported in the coming days.

Additionally, any weather-related concerns over the week for either crop in the U.S. will increase prices even more.

The outlook for corn prices remains bearish, however, as the U.S. is headed for a record-high corn harvest.

In Asia, South Korean feed buying group the Korea Feed Association bought 495,000 metric tonnes of corn last week in two separate tenders, taking advantage of the weakness in corn prices.

While the magnitude of KFA's purchase was quite high and may not be matched by purchases in South Korea this week, traders said feed buying groups Major Feedmill Group and Nonghyup Feed Inc may float tenders for buying corn this week.

South Korean traders are now buying corn for the October-December quarter, locking in prices of U.S. corn, harvesting for which begins late September.

In India, the federal government is expected to announce the result of a tender to import 1 million tonnes of wheat Wednesday. If the government buys the entire tendered quantity, it would provide good support to international prices, as such a big purchase would come at a time when international wheat stocks are low.