Asia Grain Outlook on Monday: Prices likely stable; markets seeks firm leads

 

 

Grain prices in Asia are likely to remain stable in the coming sessions with the market now in need of a stronger sense of direction while China's markets are likely to remain quiet ahead of, and during, a major holiday starting Oct. 1.

 

In China, wheat prices in major growing areas were steady on the week to Monday - in Zibu, Shandong wheat prices were RMB2,000 a metric tonne; the traditional rise in flour demand ahead of the holiday has begun to taper off, traders said.

 

The focus for global wheat prices will remain on the approaching U.S. harvest and ample global stockpiles in the weeks ahead, with Asian buyers likely to continue buying on a hand-to-mouth basis for now amid a general sentiment prices could ease, said a trader in Tokyo.

 

A U.S. Department of Trade spring wheat harvest report is due Wednesday, in which the USDA is expected to raise its estimate for spring wheat production due to reports of strong yields, said Larry Glenn, a broker and analyst at Frontier Ag.

 

The downside potential for China's wheat prices may be limited, however, as reduced corn output due to drought in the country could lead to an increase in wheat substitution in animal feed production, observers said.

 

Regional corn buyers are also monitoring the development of frost in key growing areas of the U.S., the world's largest producer, amid recent warnings frost might strike immature corn fields in the northern Plains and upper Midwest as early as next week.

 

The U.S. corn crop, which was planted late this spring, is estimated to be developing more than two weeks behind schedule.

 

In other news, Vietnam's 5% broken rice export prices, currently at US$378/tonne, may find support from market talk of further large sales to the Philippines, the International Grains Council said in a report over the weekend.

 

The Philippines is the world's largest rice importer; last year it bought around 2.3 million tonnes. Vietnam's rice exports this year are expected to reach a record 6 million tonnes.

 

"Although (Vietnam's) current export market activity was generally light, underscored by reduced loading activity at Saigon port, official data confirmed the strong pace of export sales during 2009. As on September 19, cumulative shipments amounted to 4.7 million tonnes, already exceeding the total for 2008," the IGC said.