October 31, 2007

 

Asia Grain Outlook on Wednesday: Wheat, corn, soy prices down; eye weak dollar

 

 

Asian buyers may face higher prices for wheat, corn and soy if the Federal Reserve announces a cut in interest rates, adding further pressure on the U.S. dollar, analysts said Wednesday.

 

A weaker U.S. dollar is expected to raise demand for U.S. commodities as foreign importers gain more buying power.

 

U.S. wheat, corn and soy futures slumped Tuesday as support from influential markets such as crude oil and precious metals waned.

 

Chicago Board of Trade December wheat sunk 14 1/2 cents to US$8.14 per bushel. Kansas City Board of Trade December wheat tumbled 17 1/4 cents to US$8.37, and Minneapolis Grain Exchange December wheat fell 19 cents to US$8.37.

 

However, the long-term outlook for wheat remains positive as analysts say that Australia, traditionally a key supplier of grains, may be forced to import wheat by mid-2008.

 

The Australian Bureau of Agricultural & Resource Economics recently released an updated crop forecast that pegged wheat production at 12.1 million metric tonnes, down from its September estimate of 15.5 million tonnes.

 

India, the world's second largest wheat consumer, said it plans to import about 1 million tonnes of wheat from December-March 2008, to beef up buffer stocks. Traders expect India to buy Canadian wheat.

 

For corn and soy, which can both be used in the production of biofuels, the correction in energy prices and a lack of fresh leads weighed on futures prices.

 

A generally dry weather pattern is expected for the rest of this week in the U.S., which will favor the harvesting of corn and soybeans, DTN Meteorlogix Weather said.

 

Corn prices in China are expected to slide over the next two weeks as the new harvest gathers pace by mid-November, and traders slow purchases this year due to ample stocks.