Asia Grain Outlook on Wednesday: Corn, wheat prices stable; slow Asia demand

 

 

Corn and wheat prices in Asia will likely remain steady in coming sessions, with a combination of recent weakness in Chicago Board of Trade futures and generally sluggish regional demand likely to cap any upside potential, participants said Wednesday.

 

In China, wheat prices were little changed this week amid sluggish trading activity, with participants citing slow demand for flour as the main factor damping interest.

 

The government's base sale prices of wheat were raised by RMB40-RMB50/tonne on Oct. 21, but that has had little impact on the market as prices are still high, analysts said.

 

However, a drought in major growing areas in Shandong and Anhui, which is expected to affect the winter crop, hasn't been factored into market prices yet, said Hai Yang, an analyst with Zhengzhou Esunny Information & Technology Co.

 

Chicago Board of Trade corn, wheat and soy futures were mixed in sluggish, rangebound trade Wednesday following recent declines.

 

Traders said the CBOT November soy contract, which settled Tuesday at a two-week low of $9.72 per bushel, is under downward pressure from favorable harvest weather in the U.S., while corn and wheat futures have declined in recent sessions due to a combination of profit-taking and a general lack of supportive fundamentals.

 

In Australia, rainfall this week through much of Western Australia's northern and central wheatbelt will be too late in the growing season to be of much benefit to winter crops including wheat in northern growing areas, industry participants said.

 

Crops growing north of a line on a map running east from Perth are mostly too close to harvest to benefit from the rain, as are crops in the far eastern wheatbelt, said Colin Tutt, general manager of operations at Cooperative Bulk Handling Ltd.

 

But south of that line, the rain will help crops mature properly and reduce the frequency of small or pinched grain, said Tutt. CBH operates an effective monopoly over grain storage and handling in Western Australia state.

 

The rain, which brought 10-25 millimeters to many areas, may even boost overall production a little, and importantly, stop further deterioration of many crops after a hot and dry October harmed yield prospects, he said.

 

Rice Prices Could Rise If India Imports

 

Prospects that India may start importing rice amid rising domestic prices and typhoon damage to rice crops in the Philippines could push global prices to higher levels, the International Rice Research Institute said Wednesday.

 

"These two countries will decide the fate of the market," said Samarendu Mohanty, head and senior economist of IRRI's social sciences division.

 

Discussions in the Indian federal government on the removal of import tariffs on rice following substantial crop losses due to both drought and recent floods could send global prices rising to high levels, he said.

 

The Philippine National Food Authority plans to increase in 2010 the volume of rice it is planning to buy in the domestic market from this year's target volume of 1 million tonnes in a bid to encourage farmers to plant the crop.

 

"The plan is to import less. This is the policy shift we are undertaking, we want to be more supportive of our domestic farmers," said Jessup Navarro, administrator of the state-owned grains trading firm.

 

The plan to buy more rice from local farmers is in preparation for the eventual lifting of the quantitative restriction on rice by 2012, which is part of the Philippines' commitment to the World Trade Organization, he said.

 

Once the quantitative restriction on rice is removed, importers may bring in any volume of imports as long as they pay applied tariffs, which currently at 40%-50% range. With the restriction still in place, the government is able to cap annual rice import volumes and shipments made by private imports are only allocations made by the NFA.

 

In other news, South Korea has purchased 43,091 metric tonnes of U.S.-origin rice in a tender, an official with the state-run Korea Agro-Fisheries Trade Corp. said Tuesday.

 

The rice was purchased in two cargoes. The first was for 20,347 tonnes to arrive on Feb. 28, 2010. The second cargo of 22,744 tonnes will arrive on June 30, 2010, the official said.

 

The Korea Agro-Fisheries Trade Corp. will tender for 70,000 metric tonnes of milled rice on Nov. 5, he said.