Asia Grain Outlook on Wednesday: Rice prices may fall on ample supply

 

 

Asian rice prices will likely be under pressure for the rest of this month due to ample supply and thin demand, while short covering will support corn and soy futures, trade participants said Wednesday.

 

The subdued demand is already reflecting on rice prices. "It is the first day after the Lunar New Year holidays and there is hardly any demand," said Thai Rice Exporters Association President Chookiat Ophaswongse.

 

Pakistan's export prices for various grades have tumbled by more than 7% this month due to a lack of buying interest and large inventories in Africa, said Raja Lal Chand Essrani, president of Raja Brokers, a Karachi-based trading company.

 

Chookiat said the trend of softening prices will likely continue for some more time; fresh demand is unlikely before March and currently there is a downside potential of at least US$10 a metric tonne.

 

The Thailand government is saddled with a large stockpile of around 6.0 million tonnes which is weighing on prices.

 

Thailand mostly exports the parboiled grade, which is currently being offered at US$550/tonne, free on board.

 

In white rice it has been outpriced by Vietnam by around US$135/tonne. Vietnam currently offers white rice at US$400/tonne, FOB.

 

In Pakistan, another major rice exporter, inventories are piling up as there is a dearth of buyers despite a sharp fall in prices.

 

Essrani said in the port city of Karachi alone, warehouses are brimming with 400,000-500,000 tonnes of IRRI-6 stocks.

 

More than 70% of Pakistan's IRRI-6 rice production is exported, so the level of inventories hinges on international demand.

 

Corn and soy futures prices still have an upside due to technicals, despite a bumper crop in Argentina and Brazil and buyers in China staying on sidelines due to the Lunar New Year holiday.

 

Corn and soy were oversold in January and there is now an upside potential, which may last until early March, said Koname Gokon, an analyst at Okato Shoji in Tokyo.

 

He said investors are likely to cover shorts and push up prices in the next few weeks.

 

March soy futures on the Chicago Board of Trade may rise to US$9.90 a bushel in the near term, he noted. It ended 20 1/2 cents, or 2.17%, higher Tuesday at US$9.65 1/2.

 

Traders put resistance for March corn futures on the Chicago Board of Trade at US$3.80 a bushel. March corn ended 5 3/4 cents higher Tuesday at US$3.67 1/4 a bushel.

 

Australia has been selling wheat aggressively since last week to take advantage of a recent recovery in prices.

 

Japan is seeking a total of 100,000 tonnes of wheat for April from the U.S., Canada and Australia in a regular tender that will be concluded Thursday.