July 30, 2011

Asia's grain prices under downward pressure

Subdued demand and weakening of the US dollar are likely to weigh on Asian grain prices, said trade participants Friday (Jul 29).

Many traders expect grains prices to decline by 10-20 cents in the next few days before fresh buying sets in, according to a Dow Jones report.

"Market is being guided by external factors due to the stalemate over US debt ceiling," said a Singapore-based executive with a global commodities trading company.

The US is the world's largest exporter of agricultural commodities, selling millions of tonnes to buyers in Asia. A weaker dollar makes US grains exports to Asia cheaper, unless currency traders shift funds to buy up large volumes of commodities.

Near-month September wheat and corn futures on the Chicago Board of Trade are currently around US$6.91/bushel and US$6.75/bushel. September soy is around US$13.57/bushel.

Both wheat and corn prices will get support around US$6.70/bushel while downside for soy is US$13.50/bushel, said Hiroyuki Kikukawa, general manager for research with Japan-based commodities brokerage Nihon Unicom.

Corn and soy are both under moderate pressure due to lack of fresh bullish news for traders to take support from, said Karl Setzer, analyst with MaxYield Cooperative in Iowa.

He said a major loss of price support is from the weather, as conditions have turned benign for the developing crops in much of the US corn belt.