January 15, 2007

 

Asia Grain Outlook on Monday: Grains premiums all set to rise

 

 

Premiums of corn and soybeans delivered to Asia may rise in the week ahead, after the U.S. Department of Agriculture cut its production estimates for U.S. corn and soybean crops in a recent report.

 

The USDA forecast U.S. soybean output for the 2006-07 marketing year ending in August at 3.188 billion bushels, down from 3.204 billion bushels predicted in its November report. Corn production in calendar 2006 was estimated at 10.535 billion bushels, 210 million bushels below the department's previous forecast in November.

 

Wheat premiums too may gain over the week, as wheat futures traded on the Chicago Board of Trade track gains in corn and soybeans.

 

Over the last two sessions, grains futures have been rising on the Chicago Board of Trade, primarily enthused by the USDA crop report published Jan. 12.

 

In Asia, commodities analysis firm JCI Shanghai said China last week booked six-to-eight cargoes of U.S. soybeans, compared with one-to-two cargoes in the previous week.

 

These cargoes were bought at a premium of 165-173 U.S. cents a bushel to the CBOT March contract, and for shipment from western U.S. ports in February and March.

 

JCI Shanghai added that after fairly limited imports in late December and early January, China is now in need of stepping up soybean imports.

 

Based on the latest Chinese customs data, China imported 2.42 million metric tonnes of soybeans in December compared with 2.61 million tonnes in the year-earlier month.

 

China's soybean imports in the calendar year 2006 reached 28.27 million tonnes, up 6.3%.

 

Meantime, Singapore-based traders said corn buying in Asia is expected to pick up this week.

 

"Corn and soybean buying will pick up this week as countries across the region still need to fulfill much of their March needs," said a broker at a Singapore-based trading firm.

 

Another trader added, "Asian traders have been hand-to-mouth for a while now and so it's time to pick up the pace of imports."

 

While traders are clearly concerned about the rise in CBOT corn, soy and wheat futures after the USDA reportlast week, they said it will become clear over the next couple of days whether these price gains will be sustainable.

 

"This CBOT price gains happened last Thursday and Friday, so it is still too early to tell if this will continue as a trend or fizzle out," one trader at a large brokering company said.

 

In other news, Pakistan's Punjab province will float a tender Jan. 15 offering 500,000 tonnes of wheat to domestic traders, a Punjab Agriculture Department official said Thursday.

 

"We will invite bids from domestic traders to buy 500,000 tonnes of wheat from state granaries exclusively for exports," said the official, who declined to be named.

 

All bids must be submitted by Jan. 18, he said.

 

"Once we get the bids, we will see if the prices are good enough for the government to release wheat from its stocks," the official said.