November 20, 2006

 

Asia Corn Outlook: Premiums may stay rangebound

 

 

Premiums for corn and wheat delivered to Asia may remain rangebound at their current high levels, as no fresh fundamental factors seem to be emerging to drive Chicago Board of Trade corn and wheat futures in any definite direction.

Over the past few sessions, CBOT corn and wheat futures have had a mixed run, mostly led by technical factors.

 

In Asia, Chinese commodities analysis firm JCI Shanghai analysts said China's corn prices are rising in the local markets, as exporters scramble to meet the shortfall in their supplies.

 

Chinese traders have booked around 4.3 million metric tonnes of corn exports over the past several months. They will begin shipping these corn shipments soon, as the Chinese government last week issued quota for exports of 4 million tonnes of corn.

 

In China, corn can't be exported without federal government quotas.

 

According to JCI, while exporters at present have stocks of around 2.8 million tonnes of corn and they have to procure 1.5 million more tonnes.

 

Adding to the corn price rise is farmers reluctance to sell newly-harvested corn as they await even higher prices, while last year's carryover corn stocks also remain low.

 

In other China-related news, China's government bought 41.25 million tonnes of domestic wheat in a minimum purchase-price program so far this year, the China Economic Times reported last week.

 

China's state-owned warehouses in six major wheat growing provinces bought domestic wheat at RMB1,380-RMB1,440/tonne from June 1 to Sept. 30, to support domestic farmers.

 

In India, the federal commerce and industry minister Kamal Nath said last week that the country may consider imposing a ban on corn exports.

 

"We are open to it," Nath told reporters on the sidelines of an industry event.

 

He said the agriculture ministry is examining corn production data to check if there is a shortage in local supplies.

 

Local corn prices are high, and this has hit the poultry industry, in which corn is the major feed material.

 

According to government estimates, India's summer-sown corn output, currently being harvested, is expected to be 11.43 million tonnes, down from 12.41 million tonnes in the year-earlier period.

 

India also normally harvests around 2.5 million tonnes of corn in April from the winter-sown crop, which is now being sown.

 

Meantime, India's wheat sowing is off to a good start with plantings estimated at 2.6 million hectares in Oct. 1-Nov. 9, up from 1.6 million hectares from a year earlier, according to the latest government data for winter sowing of crops issued early last week.

 

Wheat is sown between October and December for harvest from February onwards.

 

Japan's Ministry of Agriculture, Forestry and Fisheries is expected to buy 170,000 tonnes of wheat from the U.S., Canada and Australia in a tender to be concluded Wednesday.

 

Last week, the ministry bought 125,000 metric tonnes of wheat from U.S., Canada and Australia, for delivery to Japan between Jan. 1-31.

 

In other wheat import deals, South Korean flour mills bought 41,600 tonnes of U.S. No. 1 wheat in two separate tenders last week.