Asia Grain Outlook on Friday: Prices may rise; low rainfall still in focus

 

 

Grain prices in Asia are likely to stay mostly firm in coming sessions, with China's corn and soy markets expected to remain underpinned by drought-related crop worries, while Thai rice prices are expected to stay firm on news that the government has revived its stockpiling program for the remainder of this month.

 

This week, the Thai government announced it has reintroduced its pledging scheme, which had ended July 31, and will purchase up to another 1 million tonnes of paddy directly from farmers to add to an already record milled rice stockpile of around 7 million tonnes.

 

Traders said the scheme was reinstated after protests from farmers, and that it will likely keep domestic prices supported in the near term, though with Thailand's main harvest due to begin in November the upside may prove short-lived.

 

The move was again limiting supply coming into private-sector hands, and has pushed Thai prices to around US$100 a tonne above neighboring Vietnam's equivalent grades, traders said. This week Thai 5% broken white rice was being offered at US$533/tonne, up from US$530/tonne a week ago and around 4% higher than in early September.

 

A new scheme, under which the government will subsidize any price shortfall if farmers are forced to sell to the private sector below THB10,000/tonne (US$297), will now begin Oct. 1.

 

In China, corn prices were steady and may rise slightly in coming sessions amid an uptick in feedmeal demand ahead of the approaching holidays that start Oct. 1, traders said.

 

Meanwhile, the Chinese market is also continuing to monitor drought in key growing regions, which is also considered a supportive factor for corn prices, they said.

 

This week, China's grain authorities sold 1.32 million metric tonnes of corn - or 42% of the stock on offer - at a weekly auction of state corn reserves, the National Grain and Oils Information Center said.

 

The government is holding corn reserves of 30 million tonnes as a buffer against price volatility.

 

Soy sales, however, were subdued, with just 15,500 tonnes sold, or 3.1% of the volume offered.

 

In India, grain prices are also likely to remain firm in coming sessions, again with the main focus staying on crop damage due to poor monsoon rains, traders said.

 

Friday, India's wheat prices were INR12,046/tonne compared with INR11,689/tonne a week ago, though soy prices eased slightly to INR20,190/tonne from INR20,520/tonne.

 

Though India's rains have improved since last month, narrowing the deficit in the breadbasket northwestern region, the monsoon is expected to withdraw from the region in a week, a top meteorological official said Thursday.

 

The monsoon rains, which begin in June and last around four months, are crucial to summer-sown crops but this year the country experienced its driest June in 83 years.

 

In Australia, production estimates for the new wheat crop are heading toward 20 million metric tonnes, rather than to a forecast of 22.7 million tonnes issued Tuesday by the Australian Bureau of Agricultural & Resource Economics, according to Perth-based marketing advisory service, Profarmer Australia.

 

While Profarmer Thursday said there is mounting concern about crops in Queensland and New South Wales, other analysts said conditions in southeastern Australia and Western Australia - the state that usually accounts for 40% of national output - are improving, likely supporting Abare's projections.

 

In other regional grain news, the Korea Feed Association Friday said it is seeking 55,000 metric tonnes of optional-origin wheat for April 15 shipment in a tender to be concluded at 0800 GMT today, while Japan's Ministry of Agriculture, Forestry and Fisheries Thursday said it bought 117,000 metric tonnes of wheat in a regular weekly tender.