November 19, 2008
Corn and soybean prices are expected to fall in the week ahead, as fundamentals and outside markets remain bearish.
Kazuhiko Saito, a commodity strategist with Interes Capital Management Co said that after Informa came out with a report that corn and soybean plantings in the US will rise next year, it added pressure to the already bearish market.
However, Informa added that wheat planting in the US was likely to fall next year, which is offering some support to wheat prices.
The news on US wheat plantings comes at a time when there's concern that Australia's wheat crop may be lower than expected.
The US Department of Agriculture last week cut its Australia 2008 wheat output estimate to 20 million tonnes from an October estimate of 21.5 million tonnes.
Saito said export demand for corn and soy remained weak, which will further weigh on prices.
The Chicago Board of Trade January soy contract will find support at US$8.50 a bushel and the December corn contract could find support at US$3.50 per bushel, he said.
In morning trade in Asia Monday, the December corn contract was up 3.2 cents, at US$3.83 per bushel, while January soy were 11.2 cents higher, at US$9.07/bushel.
In other news, India's federal government is mulling an increase in the intervention price for wheat to encourage wheat planting.
Wheat sowing in India begins next month.
India's Commission on Agricultural Costs and Prices has recommended an INR800 per tonne, or 8 percent, hike in the intervention price of wheat for 2009 from the 2008 intervention price of RS 10,000 per tonne.
India is Asia's second-largest wheat producer; strong output growth would likely pressure prices in 2009 when crop is harvested in February and March.