October 5, 2009

Grain prices in Asia may fall in coming sessions, with a continued focus on likely bumper U.S. harvests damping regional importers' buying interest ahead of a U.S. Department of Agriculture crop estimate report due later this week, industry participants said Monday.

 

Rice prices may find support, however, as the Philippine agriculture department's latest estimate of damage to paddy from two typhoons in the last 10 days is 316,000 tonnes, equivalent to around 205,000 tonnes of milled rice.

 

Officials said the country has sufficient inventories to last until the end of this year, but there may be a need to increase imports to avoid a supply crunch early next year.

 

"We have ample stocks to see us through until the end of the year. The National Food Authority has around 30 days worth of supply, but with commercial inventories we have around 67-68 days worth of supply. There may be a need to import more, but that would be to avoid a potential shortfall in the first quarter of next year rather than because there is a shortfall now," said Rex Estoperez, spokesman for the state-run National Food Authority.

 

However, another senior NFA official said Monday that the country may start importing rice this month for next year's requirement.

 

"It's possible we will begin importing this month to be better prepared for next year," he said.

 

Traders said regional rice prices could rise in the near term, though generally ample global stockpiles means a prolonged spike in prices is unlikely.

 

Thai rice prices were unchanged Monday after rising last week, with Thai 5% broken white rice offered at US$530/tonne free on board.

 

In other regional grain news, traders said they expect only Asian buyers to stay quiet in coming sessions due to the generally bearish tone for international prices, with expectations of bumper harvests in the U.S. likely to weigh further on sentiment in coming sessions.

 

"I don't think we are going to see too much activity until after the Oct. 9 USDA report. The global market appears to have more downside and some of the big buyers, notably Taiwan, now appear to be covered having bought well over the last few weeks," said a Taiwan-based trader with a major Japanese trading firm.

 

On Friday, Chicago Board of Trade wheat, corn, rice and soy contracts all posted losses due to expectations of bumper U.S. harvests, with soy hitting their lowest levels in 10 weeks.

 

Meanwhile, India's retreating monsoon is likely to unleash rainfall over key northern Indian foodgrain regions over the next two days, the India Meteorological Department said Monday.

 

The late rainfall is unlikely to increase harvests of summer-sown crops such as rice and oilseeds, but has brightened the prospects for winter-sown crops including wheat and some rice varieties.

 

India's annual monsoon rains between June 1 and Sept. 30 were the worst since 1972 due to a dry spell in June and July, but showers revived in mid-August and have lingered well past the usual end of the season on Sept. 30, benefiting some crops and damaging others.