August 13, 2007

Asia Grain Outlook on Monday: Prices may fall on global financial turmoil

Prices of grains imported to Asia may fall in the week ahead, as grain traders are wary of the potential impact from the global global credit liquidity crisis and the financial market turmoil in its wake.

"General financial market turmoil is weighing on grain and oilseed prices as different players eye the potential effects on global food and energy demand," Commonwealth Bank of Australia said in a report Monday.

In addition, unfavorable weather conditions in the U.S. Midwest are expected to continue weighing on Chicago Board of Trade corn and soybean prices through the week, as planting continues.

In Asia, high prices may deter Chinese buyers from importing more soybeans over the week.

Last week, Chinese soybean crushers bought small amounts of soybeans from the U.S., Argentina and Brazil, commodity analysis firm Shanghai JCI said in a report Monday.

However, state-run China National Grain and Oils Information Center, or CNGOIC, said China's overall soybean imports in the 2007-2008 crop year starting in October may rise, which could be potentially bullish for soybean prices.

An ongoing drought has slowed soybean growth in major producer Heilongjiang province and other growing areas such as Jiangxi and Hunan provinces, which may reduce the country's total soybean output by around 200,000 tonnes to 14.8 million tonnes in 2007-08, CNGOIC said.

As such, it expects the country to import 31.5 million tonnes of soybeans in the 2007-08 crop year, up 11% from the current crop year.