July 17, 2009

Corn prices in Asia may decline in coming days as bellwether Chicago Board of Trade futures continue to come under pressure from optimistic U.S. crop forecasts, while China's announcement that it will start selling crops is also a bearish factor for the market, observers said Friday.

China will sell 500,000 metric tonnes of soy and 2 million tonnes of corn next week, according to a statement published on the China National Grain and Oils Information Center's Web site Thursday. The government will also sell 700,000 tonnes of rice and 750,000 tonnes of wheat, according to the statement.

In Asian trading Friday, e-CBOT's September corn recovered marginally from 12.75 U.S. cent decline Thursday. At 0615 GMT, September corn was trading 3.40 cents higher at US$3.20 a bushel, though market observers said the upside potential appears very limited.

"It does look as though corn has gone into a downtrend on the assumption that rain and cooler weather in the U.S. will boost crops. We're looking at a probable test of US$3.00 a bushel support, though I think the market could find an immediate floor there," said Koname Gokon, deputy research manager with Okato Shoji Co.

CBOT wheat futures also slipped in the U.S. overnight, having risen to a fresh weekly high earlier in the session, with traders attributing the fall to external pressure from other grains and outside markets. At 0620 GMT, e-CBOT's September wheat contract was up 4.60 cents at US$5.38 a bushel.

In Australia, Agribusiness AWB Ltd. (AWB.AU) Friday cut its estimated pool return on benchmark 2009-10 Australian Premium White grade wheat by A$5 per metric tonne to a range of A$305-A$315 per tonne, free on board.

"The Northern Hemisphere wheat harvest is proceeding apace and buyers are now seeing plenty of wheat available, which is adding to the stocks from last year that are held by many countries," Stuart Richardson, a spokesman for AWB's Australian commodity management unit, said in a statement.

Japan's Ministry of Agriculture, Forestry and Fisheries purchased 108,000 tonnes of U.S., Australian and Canadian wheat in a regular weekly tender concluded Thursday, an agriculture ministry official said.

In India, the annual monsoon has gathered momentum this week, with rains 6% above normal in the week to July 15 compared with a deficit of 8% the previous week, the India Meteorological Department said Thursday.

Sowing of India's summer rice crop was 76% more advanced last week than in the previous week, while sowing of other summer crops has been showing similar improvement in the past few days, India's Farm Minister Sharad Pawar said Thursday.