December 17, 2007

 

Asia Grain Outlook on Monday: Wheat, soybean prices to keep rising

 

 

Wheat and soybean prices should rise in the week ahead, tracking bullish sentiment on the Chicago Board of Trade.

 

CBOT wheat futures have been making sharp gains since Friday, and at 0547 GMT, the March wheat contract was up 24.4 cents at US$10.04 a bushel.

 

According to analysts, strong demand for wheat from Asian countries is buoying wheat futures, as global inventories are at 30-year lows.

 

More wheat buying is expected to come in over the next seven to 10 days, as India's state-run State Trading Corp. will likely buy 350,000 metric tonnes in a tender. The bidding ends Monday, and the tender is expected to be awarded later in the week or early next week.

 

Meantime, India's wheat sowing continues to lag behind last year's level, raising concerns about a shortfall in output in 2008, which could lead to more imports and support international prices.

 

The latest government data show wheat has been sown in around 20.63 million hectares in the Oct. 1-Dec. 14 period, compared with 23.48 million hectares a year earlier.

 

The government continues to insist that wheat output in 2008 won't lag behind 2007 levels, as farmers may speed up their sowing in the next few weeks. Harvesting begins in late January.

 

In soybeans, dry weather in Argentina and Brazil should support international prices.

 

Chinese soybean buyers continue to be cautious in booking fresh shipments, as arrivals in Chinese ports have been rising due to heavy buying in October and November.

 

Last week, Chinese buyers booked seven soybean cargoes from the U.S. and South America for shipment in January, down from 14-16 cargoes a week in the previous month.