Asia Grain Outlook on Wednesday: Rice prices may fall, corn outlook firm

 

 

Grains prices in Asia will likely be mixed in coming sessions, with the outlook for rice generally bearish ahead of Thailand and Vietnam's November harvest, though regional corn prices may stay firm amid lingering weather-related crop concerns, observers said Wednesday.

 

Soy prices could also come under pressure from Ministry of Commerce of China's forecast this week that October imports could slip to 1.5 million tonnes - the lowest since February 2007 - and expectations of big harvests in the U.S. and South America, likely to drag sentiment lower.

 

The recent decline in regional rice prices has this week prompted Vietnam's state-run Southern Food Corp. to buy 500,000 metric tonnes of the grain in the next two-months to help maintain profitability for farmers, the government said Wednesday.

 

Southern Food will get interest-free loans for the rice purchases, the government said, adding that the move is aimed at helping local farmers to earn profits of at least 30%. It didn't specify what price the company would pay for the rice, which it said would be stockpiled.

 

Previously, the Vietnam Food Association also said it had asked a group of 21 traders and exporters to buy 500,000 tonnes of paddy directly from farmers at a fixed 3,800 dong/kilogram to try and stabilize falling prices.

 

In Thailand, rice prices fell by about 3% to around US$520/tonne in the week to Tuesday, pressured by government stock releases and expectations that a change to a previous pledging scheme - effective from Oct. 1, under which farmers will receive a subsidy guaranteeing them THB10,000/tonne if they are forced to sell at prices below that level - will lead to increased supplies in the domestic market, traders said.

 

 

Seasonal Lull For China

 

Bearish corn and soy import data this week from China's General Administration of Customs, though largely expected, underlined the effect of state soy stockpile sales, pricier imports and a conventional period of a late-summer lull in demand, observers said.

 

Soy imports fell 18% on year in August, while corn imports fell 53% to 11,862 tonnes. Wheat imports, however, were 7,538 tonnes in August compared with none last year, but down 91% compared with the previous month, the data showed.

 

In other regional grain news, North Korea's staple corn crop is expected to fall sharply this year and worsen an already serious food shortage in the country, Agence France-Presse said, citing a North Korean news report.

 

The head of the International Corn Foundation told Yonhap news agency he expects the crop to be less than 1.5 million tonnes, down from the annual average of 2.5 million tonnes, AFP said.

 

Regional corn prices are expected to stay firm in coming sessions, with tight supply due to China's drought a supportive factor, while an overnight rally in Chicago Board of Trade corn futures on the back of U.S. weather concerns and weakness in the dollar could also help support global prices, observers said.

 

Grain futures on CBOT were trading mostly lower during Asian trading hours Wednesday, however, following a generally mixed session in the U.S. overnight.

 

At 0641 GMT, e-CBOT's December wheat was trading down 1.40 cents at US$4.54/bushel, having closed down Tuesday for the fifth consecutive U.S. session.

 

Traders said a general lack of supportive news and ample global wheat stockpiles are the main factors pressuring wheat lower.

 

Meanwhile, India's government will review its current wheat purchase support price next month, India's federal farm secretary, T. Nandkumar, said Wednesday.

 

India had previously fixed a support price of INR1,080/100 kilograms for buying wheat in the 2008-09 season.