Asia Grain Outlook on Wednesday: Prices steady; market awaits China's return

 

 

"The local market has been quiet but a better picture will develop next week when China returns from the holiday, and after the next U.S. Department of Agriculture releases its next stocks report (Friday)," said Okato Shoji Co. research analyst Goname Gokon.

 

"It will be interesting to see whether China comes back into the international soybean market as their imports had shown a marked slowdown prior to the holiday," he added.

 

China's soybean imports spiked in the first half of this year but tapered off in the build-up to the eight-day National Day holidays.

 

According to a late September report by the Ministry of Commerce, China's soybean October imports this month could reach 1.5 million metric tonnes, the lowest since February 2007.

 

Until August this year China had imported 29.6 million tonnes of soybeans, a rise of 21% from the same period last year, which equates to a monthly average up to August of 3.7 million tonnes.

 

Chicago Board of Trade soybean futures rose Tuesday with the November contract up 25.00 cents at US$9.10 a bushel; traders cited outside influences and wet, cold weather that could cause possible harvest delays as the main supportive factor.

 

CBOT corn futures also rallied Tuesday, with the December contract settling up 16.75 cents to US$3.58/bushel, though regional buyers have remained quiet in recent sessions.

 

"We will continue to monitor the market but we are generally well covered now until early next year. We won't be buying unless the market looks like its is in for a sustained rally," said an official with a major South Korean corn buying association.

 

Taiwan-based buyers are also likely to be quiet in coming sessions, having bought sufficient corn and wheat cargoes in recent weeks, traders said.

 

In other regional news, an official forecast for the production of winter grains including wheat in Western Australia during this crop year was upgraded this week following average to slightly above average rainfall in September across most of the state's wheatbelt.

 

The total production of winter grains in the state is now forecast in a 12.5 million-14 million tonnes range, versus 11 million-13 million tonnes a month ago, according to a monthly seasonal update issued by the government's Department of Food and Agriculture.

 

Meanwhile, regional rice prices may come under pressure in coming weeks, despite an expected increase in imports to the Philippines where typhoon damage incurred by the country's agriculture sector swelled to PHP7.6 billion (US$163 million), with the rice sector bearing the brunt as losses climbed to PHP6.2 billion.

 

Philippine officials said the country may start importing rice this month for next year's requirement though all imports will be used to beef up 2010 supply as the country has ample supply for the current year.

 

A damage report released by the department of agriculture said more than 250,000 hectares of rice area were affected by Typhoons Ketsana and Parma, bringing production losses to around 360,000 tonnes of paddy rice.

 

However, regional rice prices are unlikely to rise sharply, with high local inventories expected to offset any rise in demand, according to traders and officials.

 

In Thailand, the world's biggest rice exporter, the Commerce Ministry's rice marketing panel has urged the Foreign Trade Department to increase rice sales on a government-to-government basis amid growing concerns the country could be heading for a domestic supply glut in the coming months.

 

Traders said Thai government stockpiles are still at unprecedented highs of 6 million-7 million tonnes of milled rice, with the next harvest, due to begin in November, expected to yield as much as 24 million tonnes of paddy, around 1 million tonnes higher than last year.