January 25, 2007

 

Asia Grain Outlook on Wednesday: Premiums may rise on Bush speech

 

 

Premiums of corn delivered to Asia may rise during the rest of this week, as President George W. Bush's plan to raise long-term ethanol production targets in the U.S. could provide substantial support for prices.

 

But the absence of any tangible measures to encourage more production of corn-based ethanol, such as further subsidies or any corn-specific research program, could keep gains in U.S. corn futures limited.

 

Over the last several Chicago Board of Trade sessions, wheat and soybean futures have been basically following corn's price trend, and a further rise in corn will also support other grains futures.

 

In Asia, so far this week, no major corn deals have been reported as traders remain concerned about high prices.

 

However, wheat deals have been stuck.

 

The Pusan branch of the Korea Feed Association Tuesday bought 104,000 metric tonnes of optional-origin feed wheat from trading houses Cargill and Toepfer. The origin of the wheat could be China.

 

Meanwhile, Japan's Ministry of Agriculture, Forestry and Fisheries is seeking 160,000 tonnes of wheat from the U.S., Canada and Australia in a tender to be concluded Thursday.

 

In other deals, the Philippines bought 500,000 tonnes of rice Monday, mostly from Vietnam, intending to boost local stocks during the lean production season in the quarter to September.

 

The imports will form part of the 1.6 million tonnes of rice the National Food Authority, the country's state-owned grain trading firm, has been authorized to bring in this year.

 

Separately, a report by the U.S. Department of Agriculture said Thailand's 2006-07 white rice production in its northern and central regions is expected to decline slightly from the previous year because of damage caused by flooding.

 

However, tight supplies will likely ease in the second quarter of 2007 in anticipation of bumper second crops.