October 15, 2007

 

Asia Grain Outlook on Monday: Soy, corn prices may pull back on supply

 

 

Asian buyers may get cheaper soy and corn in the near term as the current high prices are unlikely to be sustained in the absence of any bullish news, analysts said Monday.

 

They don't believe that corn futures prices - now hovering near US$10 a bushel - will increase any further, despite news such as a recent U.S. Department of Agriculture report which said soybean acreage has fallen in 2007.

 

Chicago Board of Trade November soybeans settled Friday 4 3/4 cents lower at US$9.76 3/4, and January soybeans ended 5 3/4 cents lower at US$9.95 1/4.

 

A recent Morgan Stanley report lowered its average corn price for 2007-08 to US$3/bushel from US$3.15/bushel on weakening ethanol demand in the near term and the prospect of a bumper crop from increased corn acreage this year.

 

U.S. farmers have planted 92.9 million acres of corn - a level not seen since 1944 - largely at the expense of soybean, which saw planted acreage decline by 11.4 million acres.

 

The USDA estimates 2007-08 corn ending stocks at 1.997 billion bushels, well above the 1.675 billion in the crop year ending Sept. 30.

 

Some of the supply growth is the result of a reduction in the amount of corn used by the ethanol industry. The USDA projects that 3.2 billion bushels will be used to make corn-based ethanol.

 

Analysts estimate the figure to be between 2.9 billion bushels and 3 billion bushels.

 

Last week, China corn prices were mostly stable as traders anticipated the new crop to enter the market in late October.

 

Increasing demand from the recovery of the feedmeal sector and lower output will likely push new corn prices higher, but increases will be capped by state sales of old corn, said China Corn Network.