January 7, 2009
Asia Grain Outlook on Wednesday: Corn, soybeans may rise; South America weather
Corn and soybean prices may post gains in the next few days on South American weather.
Dryness in Brazil and Argentina has raised concerns for soybean and corn crops being planted there.
"While both countries saw rainfall on the weekend, the general perception was that it was at insufficient levels to provide much alleviation for the soy crop," said an analyst report by Barclay's Capital late Tuesday.
According to Tim Hannagan of U.S.-based commodities broking firm Alaron, funds continued to build long positions in corn contracts on the Chicago Board of Trade due to South American concerns.
He added that the next resistance level for the CBOT March corn contract is US$4.34 a bushel.
At 0556 GMT, CBOT March corn was little changed from Tuesday's pit-trade closing at US$4.26/bushel.
In Asia, feedmillers are buying more feed wheat instead of corn, as the price differential between the two commodities remains large.
Corn and feed wheat can be easily substituted for each other in most feed material for cattle, hogs or poultry.
According to the manager of a Seoul-based feedmilling company, feed wheat, mostly sourced from the Ukraine, is now US$40-US$50/tonne cheaper than U.S. corn, a differential which has widened from US$20-US$30/tonne a week back.
He said that while South Korean millers continued to buy U.S. corn, many feedmillers may end up using more feed wheat than feed corn this year.
But he said it's too early to say if South Korea's overall corn imports will fall in 2009.
The Philippines also is expected to receive a total shipment of 300,000 tonnes of feed wheat in the first five months of the year.
The feed wheat, booked by millers since October last year, ranges in price from US$138 to US$226/tonne on a cost and freight basis.
In the Philippines, while the government doesn't impose an import duty on feed wheat, it levies a duty of 35% on corn.