February 6, 2012

 

Asian grain prices to rise on forceful demand

 

 

Due to strong demand in the cash market and continuing concerns on weather in the Black Sea region, Europe and South America, Asian grains prices are likely to increase next week, market participants said.

 

Wheat, corn and soy prices may rise by up to US$0.20 a bushel early next week after a recent bout of profit-taking, they said.

 

Near-month wheat, corn and soy futures on the Chicago Board of Trade are trading around US$6.65, US$6.44 and US$12.24 a bushel, respectively.

 

Lack of snow cover and freezing temperatures in France have created concern about damage to the wheat and rapeseed crops, a London-based commodities analyst said. Weather continues to move the grain markets but the bulls could lose steam in the short term if conditions improve, he said.

 

Frigid cold has also affected the grain crop in the Black Sea region, with Ukraine experiencing yield loss of 40%. There will be profit-taking at regular intervals but overall prices are on the rise, market participants said.

 

Wheat prices could rise to US$7 a bushel, said Koname Gokon, the Tokyo-based deputy general manager at Okato Shoji Co.

 

"Strong demand in the physical market is also supporting the market because many importers in East Asia kept putting off purchases until the last minute on the hope that prices would ease, which didn't happen," said a Singapore-based executive with a global commodities trading company.

 

Wheat millers in Asia have been buying hand to mouth and the unexpected has happened--they are short and need cargoes for February shipment, FCStone Australia said in a note.

 

Soy prices are finding support from an increase in export interest as China has stepped up purchases, said Karl Setzer, an Iowa-based analyst with MaxYield Cooperative. Traders expect CBOT soy prices to remain above US$12.20/bushel.

 

"In corn, US inventories available for trade are only 50% of what they were a year ago," Setzer noted.

 

Taiwan's Corn Industry Procurement Association Friday purchased a cargo of around 50,000 tonnes of Argentinean corn from CJ International at a premium of US$1.594 a bushel over the CBOT May futures contract, including cost and freight, for shipment March 17-31.

 

At current price levels, this is around US$320/tonne, C&F, up US$30/tonne from early December.