August 20, 2007

 

Asia Grain Outlook on Monday: Prices may rise as equity markets stabilize

 

 

Grains prices may rise in the week ahead, as stability returns to global financial markets.

 

Over the past week, Chicago Board of Trade grains futures were completely dominated by the sharp fall in equity markets around the world.

 

Weather will again be the dominant factor affecting grains futures this week, with some soybean and corn growing areas in the U.S. expected to benefit from showers, while others may suffer hot and dry weather.

 

U.S. grains traders are also concerned about the impact of storms such as Hurricane Dean and Tropical Storm Erin on their crops.

 

In Asia, Japan and Taiwan may seek wheat.

 

Traders said Japan's Ministry of Agriculture is likely to seek wheat in its usual weekly wheat tender on Tuesday, while the Taiwan Flour Mills Association may seek wheat in tender later in the week.

 

Japanese grain markets are abuzz with speculation that the federal government may increase the price of wheat imports to local flour millers by 10%, following recent sharp gains in CBOT wheat futures.

 

In Japan, the federal government buys imported wheat in tender and sells it to flour millers.

 

While a decision is pending on the new wheat prices, traders said flour millers and retail chains could absorb large cost rises in wheat due to severe competition between retailers.

 

In other news, India's soybean crop may rise by 12% on year to 8.5 million tonnes in the 2007-08 oil marketing year beginning Nov. 1, according to local analysts.

 

They said the yield of the soybean crop, currently being sown, could rise by up to 22% on year, because farmers are using high-yielding seed varieties and there have been no major pest infestations so far.