Asia Grain Outlook on Monday: Robust gains likely on investment demand
Grains started 2010 with robust gains on investment demand, and analysts expect soy to continue outperforming in the short term on the back of buoyant Chinese buying.
Benchmark March soy futures traded on the Chicago Board of Trade were up 1% at US$10.59 per bushel at 0654 GMT. March corn futures were 1.1% higher at US$4.19/bushel, while March wheat futures were at US$5.49/bushel, up 1.4%.
Looking ahead, "soy will probably perform better than corn and wheat because of Chinese imports," said Koname Gokon, a commodities analyst at Okato Shoji Co.
Gokon said the latest U.S. export inspections data again underlined the strong demand from China, which seemed to be overshadowing the expectation of a large crop rebound in South America this year.
The U.S. Department of Agriculture on Thursday said export sales of soy stood at 1.075 million tonnes in the week to Dec. 31, with Chinese purchases accounting for nearly half of the total.
"Corn and wheat have different fundamentals than the (soy)beans," Mark Gold, managing partner of Top Third Ag Marketing, said in a report Thursday.
"The biggest difference is, in my opinion, the American farmer has sold the majority of their 2009 beans, where they still own the majority of 2009 corn and 2010 wheat."
However, analysts said corn and wheat will benefit from inflows of funds due to the commodity indices rebalancing.
The rebalancing of the S&P GSCI and DJ-UBS indices is expected to raise the open interest of CBOT wheat and corn futures by around 6%, according to a research report by Standard Chartered Bank released Dec. 18.
In fact, grains and soy should be the main beneficiaries in the process of funds' rebalancing investments, in which an estimated US$6.2 billion worth of futures contracts will be sold and an equivalent value bought, said Helen Hentonne, the bank's head of commodity research, in the report.
The grains lagged far behind the gains in other commodities in 2009.
