January 21, 2009
Asia Grain Outlook on Wednesday: Corn may fall more on demand, dollar
Corn prices may continue to slide on a weak demand outlook and stronger dollar.
Analysts in the U.S. are saying the Chicago Board of Trade March corn contract may not touch significant resistance at US$4 for some time.
At 0659 GMT, CBOT March corn was trading at US$3.84 a bushel, up 1.2 cents from Tuesday's pit-trade close.
A weak trend in global wheat and soybean prices is also weighing on corn.
The only bullish factor for corn now is dry weather in Argentina, which is affecting the crop there, though Brazil, another South American producer, has seen some rains in recent days.
In Asia, buyers expect corn prices to fall further over the next few weeks.
"The credit crunch continues to put pressure on grain prices and traders expect more downside," said Nobuyuki Chino, a Tokyo-based trader.
He said that while the current price of U.S. corn in Japan for March shipment is US$207 a metric tonne on a cost and freight basis, it is likely to fall to US$195/tonne in the next few weeks.
Japanese buyers will in all likelihood buy up to 1 million tonnes of corn in the next 15-20 days as they complete their purchase for the first quarter of the calendar year.
Traders said Japanese buyers are sticking to buying U.S. corn, since corn from Asia's main exporter, India, doesn't match up to Japanese buyers' standards.
They said India's corn quality is irregular and therefore not good enough to be used in large volumes for producing animal feed.
India's corn exports have fallen sharply in the first four months of the crop year that began Oct. 1, 2008 to 50,000 tonnes, one third of exports in the corresponding period last crop year.
Indian corn is currently trading at US$190/tonne, free on board, while U.S. corn is being quoted at US$170/tonne, as the Indian government is buying corn from farmers at higher than market levels.
In deal news, Japan's Ministry of Agriculture is seeking to buy a total of 157,000 tonnes of wheat from Canada, Australia and the U.S. in a tender to be concluded Thursday.
