August 15, 2007

Asia Grain Outlook on Wednesday: Wheat prices may gain on tight supply

Prices of imported wheat in Asia may rise in the remaining part of this week, as Chicago Board of Trade futures are expected to build on gains posted so far this week.

CBOT wheat prices have been rising this week supported by strong demand for U.S. wheat, particularly from Egyptian buyers, and concerns of reduced wheat output across Europe.

In addition, analysts now say that the Australian wheat crop currently being sown may not reach the earlier forecast of 22 million-23 million tonnes due to continued dry weather in many growing areas.

Analysts say that the crop may be around 20 million tonnes, although the U.S. Department of Agriculture Friday maintained its output forecast for Australian wheat at 23 million tonnes.

Australia, a major wheat exporter, last year harvested just 10 million tonnes of wheat due to the prolonged drought in the country, severely reducing its availability of wheat for export.

Corn and soybean prices on the other hand may fall slightly in the rest of the week on forecasts of near-term wet weather in U.S. planting areas.

In Asia, markets may continue to remain quiet with grains traders staying on the sidelines, due to high ocean freight costs and still-high international grains prices.

The last reported corn tender, for instance, was placed last week, when South Korea's Nonghyup Feed Inc bought 55,000 metric tonnes of Chinese corn for US$223.19/tonne, for delivery between Sept. 21-Oct. 10.

Japan's Ministry of Agriculture is seeking 70,000 tonnes of U.S. wheat in its weekly tender to be concluded on Thursday. Unlike previous tenders, the current exercise didn't seek any Australian and Canadian wheat.