September 19, 2007

 

Asia Grain Outlook on Wednesday: Soybean may keep rising on fundamentals

 

 

Prices of imported soybeans in Asia may continue to rise for the rest of this week, even as wheat catches its breath after a long rally that started in May.

 

Bullish news has continued to lift Chicago Board of Trade soybean futures. On the top of the U.S. sowing markedly reduced soybean acreage this year, there are now reports of frost damage to the crop.

 

Moreover, Brazil's soybean planting may be delayed because of dry conditions in key growing areas.

 

For wheat, while fundamentals remain very bullish, the market seems to have factored in most of them, especially news that Australia's wheat crop will likely be much lower than earlier expected.

 

"Yesterday's (Tuesday) action might, technically, be a sign the (wheat) market is at a peak. Wheat could not rally past the old high and so set a lower high for the first time in a while," said an analyst report by the Commonwealth Bank of Australia Wednesday.

 

In Asia, buying of mostly wheat has emerged over the week. Japan's Ministry of Agriculture sought a total 115,000 tonnes of Canadian and U.S. wheat in a tender to be concluded Thursday.

 

South Korean flour millers bought a total of 477,000 tonnes of U.S. No. 1 wheat in two tenders on Tuesday, for October-December shipment.

 

Prices of wheat in these tenders ranged from US$340/tonne-US$360/tonne.

 

In other news, Pakistan's Dawn newspaper reported Wednesday that state-run Trading Corporation of Pakistan, or TCP, has revised the wheat output estimate for this year to 22.2 million tonnes from an earlier estimate of 23.5 million tonnes.

 

TCP said Pakistan is facing a shortfall of 1.6 million-2.1 million tonnes of wheat. The government announced last week that it may import up to 1 million tonnes of wheat, though it didn't give any timeframe.