October 1, 2007

 

Asia Grain Outlook on Monday: Wheat prices may keep soaring on CBOT

 

 

Asian wheat buyers may have to pay higher prices this week as Chicago Board of Trade wheat futures extend their gains.

 

In Friday's U.S. trade, the CBOT benchmark December wheat contract touched a new all-time high of US$9.61 a bushel before settling off highs.

 

In Asian trade, December wheat is trading 8 cents higher than Friday's U.S. close, at US$9.47/bushel.

 

Apart from weather concerns in Australia, which may shrink its crop size to 10 million metric tonnes, much lower than an earlier estimate of 15 million to 16 million tonnes, the U.S. Department of Agriculture said last week the U.S. wheat crop may also be lower than earlier estimated.

 

Global wheat stocks are at a three-decade low, while demand for wheat continues to be robust. Over the next few months, the wheat price outlook remains very bullish.

 

In terms of CBOT, market participants are keenly eyeing wheat breaching the psychologically important US$10/bushel resistance level, which would give an enormous boost to the bulls.

 

In Asia, China is likely to keep actively buying soybeans as local soybean supply remains tight and also to take advantage of the recent reduction in China's soybean import duty.

 

Last week, Chinese buyers bought 8-10 cargoes, mainly from the U.S. and Brazil, for shipment in November.

 

At present, soybean shipments to China from South America or the U.S. are at a premium of 290-315 U.S. cents/bushel to the CBOT November contract.

 

In other news, San Miguel Corp., the Philippines' leading agri-products company, last week signed a memorandum of understanding with the nation's agriculture department to help reduce the Philippines' post-harvest corn losses due to spoilage and spillage, which amount to 15% of the country's total output.

 

San Miguel intends to set up four grain centers at a cost of up to PHP40 million per center to offer post-harvest facilities that reduce wastage.