November 23, 2009

 

Asia Grain Outlook on Monday: Wheat, corn prices down; weather, high stocks

 

 

Grain prices in Asia are likely to remain under pressure in coming sessions due to recent declines on the bellwether Chicago Board of Trade under pressure from good weather in the U.S., which is expected to favor harvesting of corn and wheat crops.

 

On Friday, CBOT corn, wheat and rice all ended the day lower, though soybeans ended the session marginally higher due to a focus on bullish demand, notably from China, participants said.

 

On Monday, China's General Administration of Customs said China's soybean imports in October rose 18% from a year earlier to 2.52 million metric tonnes. In the January-October period, soybean imports rose 13% to 34.88 million tonnes.

 

China is the world's biggest importer of soybeans and gets most of its supplies from the U.S., Brazil and Argentina, the world's leading soybean producers.

 

In the U.S., where the soybean harvest has started, prices are likely to be underpinned in the absence of export competition from South American suppliers ahead of the harvest in Brazil and Argentina in early 2010.

 

Investors bullish on soybeans bought futures Friday on the view that demand for U.S. soybeans is greater than the market expected, said Tim Hannagan, an analyst with P.F.G. Best in Chicago.

 

The allocation of investment money into the commodity remains a price support, as buyers who have no physical need for soybeans are attracted by the idea that prices will continue to increase.

 

The outlook for CBOT wheat and corn remains negative, however, with wheat supply-demand fundamentals viewed as weak due to ample global inventories, and corn futures likely to come under pressure from favorable weather in the U.S. for the harvest.

 

However, the downside risk to corn should remain limited to an extent by end-user and commercial buying on weakness, participants said.

 

Rice prices, meanwhile, should remain underpinned in the coming weeks and months from continued strong demand from the Philippines and India following adverse weather earlier in the year.

 

The Philippines will seek to buy up to 600,000 metric tonnes of rice in a tender Dec. 15 to shore up domestic supplies next year, following extensive typhoon damage to domestic crops, the state-owned National Food Authority said Monday.

 

This will bring the country's total imports for 2010 to 2.050 million tonnes, as the agency is also planning to buy 600,000 tonnes in each of two tenders Dec. 1 and Dec. 8.

 

Earlier this month, the agency signed contracts to buy 250,000 tonnes of the grain, mostly from Vietnam, for delivery next year.

 

An agriculture official said last week that the NFA has been authorized to import a record 2.5 million tonnes of rice for next year, compared with 1.775 tonnes of imports this year, which would eclipse record shipments of 2.3 million tonnes in 2008.