July 3, 2009

Grains prices in Asia may turn weaker in coming sessions following a decline across the board on bellwether Chicago Board of Trade futures Thursday, which was weighed down by softer crude oil prices, a firmer U.S. dollar and liquidation ahead of a holiday Friday in the U.S., traders said.

 

CBOT's September wheat contract Thursday dropped 6.50 cents to close at US$5.29 a bushel, down 34 cents on the week as traders exited positions ahead of the holiday, with further selling pressure coming from weakness in corn and soy contracts. CBOT is closed Friday, and trading resumes Monday.

 

The ongoing U.S. winter wheat harvest also continued to weigh on prices, despite forecasts that rains may slow cutting in parts of the U.S. plains, an analyst said.

 

Traders in Asia said weaker U.S. prices could spur buyers, though importers will likely adapt a "wait-and-see" stance in coming sessions.

 

The Taiwan Flour Millers Association Thursday purchased 82,350 metric tonnes of U.S.-origin wheat from United Harvest, while Japan's Ministry of Agriculture, Forestry and Fisheries bought 108,000 metric tonnes of U.S.- and Australian-origin wheat in a regular weekly tender.

 

In Australia, production from a new wheat crop should reach 22.5 million metric tonnes, up 5.1% on year if achieved, but there are significant risks, Commonwealth Bank of Australia said late Thursday.

 

Current conditions across the majority of the Australian wheat belt are generally good, though output could fall without sufficient rainfall in late winter and spring, particularly in the southern growing regions, with production below 20 million tonnes "a distinct possibility," said commodity strategist Luke Matthews.

 

CBOT corn also dipped Thursday, again weighed down by weaker crude oil prices and a firmer U.S. dollar, while the market also succumbed to position adjustments ahead of Friday's holiday, traders said.

 

CBOT's July wheat contract ended the day 6.00 U.S. cents lower at US$3.45 3/4 a bushel, while December corn dipped to a low of US$3.57 in late trading - a price last seen in early-December.

 

Corn could come under further selling pressure next week with generally favorable weather reports likely to boost crop development in the short-term, traders said.

 

July is a critical month in corn development as pollination occurs during this time and drought and heat can stress the crop and reduce yields.

 

Meanwhile, South Korea's Major Feedmill Group bought 55,000 metric tonnes of U.S.-origin corn at US$216.90/tonne in a tender concluded late Thursday, a company executive said Friday.

 

MFG canceled a similar tender for 55,000 tonnes of U.S corn late Wednesday amid expectations prices would ease in the coming weeks following the bearish U.S. Department of Agriculture acreage report.

 

The USDA report projected 2009 seeded acres at 87.035 million, a significant increase from its March estimate of 84.986 million acres.