Asia Grain Outlook on Monday: Prices may rise; CBOT support, dry weather

 

 

Grain prices rose Monday in Asia on the bellwether Chicago Board of Trade and could rise further still in coming sessions as the market continues to monitor the recent development of drought and the potential impact that could have on crop output in the region, analysts said.

 

As well as the development of drought in some of China's key grain producing regions, slow monsoon rain in India is expected to cut output there in the months ahead and could lead to an increase in imports.

 

Friday, Finance Minister Pranab Mukherjee said India would maintain, through imports, the demand and supply equilibrium for any commodity in short supply.

 

India's Meteorological Department has estimated that rainfall during the June-September monsoon season this year will be substantially below the long-term average, severely reducing plantings and damaging standing crops in many parts of the country.

 

A late burst of rain in the past five to seven days over India's grainbowl northern region, however, has limited some of the earlier damage to the summer-sown crops, including rice and pulses.

 

Still, India's rice acreage is expected to fall more than 20% on year to 22.8 million hectares, a scenario that will likely keep domestic prices high, traders said.

 

"(The) decline in rice production will in turn increase demand for winter-sown wheat. Also, a delay in the stock release by the federal government is supporting prices," said a Delhi-based trader.

 

At 0707 GMT, e-CBOT's November soy contract was up 21.60 cents at $9.94/bushel, while the November rice contract was up 19.00 cents at $13.57/hundredweight.

 

Corn and wheat were also trading higher; December corn was up 3.40 cents at $3.29/bushel, while December wheat was up 2.60 cents at $4.90/bushel.

 

Traders said Monday's rise was in line with broader gains throughout the commodities complex, with firmer equity markets the main supportive factor while generally bullish July import data from China also lent psychological support.

 

China imported 4.39 million metric tonnes of soy in July, up 25% from a year earlier, while wheat imports surged to 85,078 tonnes compared with only 373 tonnes a year earlier, data issued Monday by the General Administration of Customs showed.

 

The rise in imports was mostly due to high domestic prices and comparatively favorable international prices, though the global market will continue to monitor the weather situation in China for signs that drought-induced crop failures could lead to a further rise in grain imports in the months ahead, analysts said.