February 27, 2012

 

Asia grains sell slow as buyers wait for prices to ease

 

 

Buyers are holding out on their grain purchases last week in hopes of lower prices, leaving Malaysia with 80,000 tonnes of corn for April shipment and Vietnam with 100,000 tonnes of soymeal.

 

The market is awaiting the result of a South Korean tender to purchase 55,000 tonnes of corn for April and May shipment, which is expected later last Saturday (Feb 25).

 

Argentine corn is being offered around US$323 a tonne, including cost and freight (C&F), up from US$315 quoted last week with a jump of 1.2% in benchmark US corn futures in three days.

 

Indian corn was offered at US$305 a tonne, C&F, up from US$290 a tonne. Ukraine corn is being quoted around US$310 to US$315 a tonne.

 

But traders said Asian buyers were expecting prices to soften on expectations of ample supplies.

 

"The outlook on grains in bearish as buyers are looking at higher supplies in the coming months," said one trading manager with a global trading company in Singapore. "They will try to put off buying plans until the last moment."

 

Global crop prices will retreat sharply this year as farmers around the world expand production to bring stability back to commodity markets and ease fears of food inflation, according to the US government.

 

The USDA forecast US wheat plantings at 58 million acres, up 3.6 million from 2011. The USDA pegged world wheat stocks at a record 213.1 million tonnes.

 

The USDA's outlook conference left unchanged from its baseline projections the forecast for 94.0 million acres of corn this year in the United States, the most since 1944.

 

Larger volumes of corn and wheat are also expected to come to international markets from the Black Sea region's leading grain producers, Kazakhstan and Ukraine, posing a bigger challenge to US exporters and threatening to drag down global prices.

 

The International Grains Council raised its global wheat production forecast by five million tonnes to a record 695 million and expects world stocks to rise to 211 million tonnes, eclipsing the previous record in 1999/2000.

 

As a result of higher wheat supplies, prices of Australian feed wheat fell last week with traders quoting US$289 a tonne, C&F, to Southeast Asia, down from US$296 traded the previous week.

 

The forecast on soy prices is bullish, with South American drought curbing supplies.

 

US soy futures rose to a five-month high last week, helped by a weaker dollar, good export demand and concerns about crop production in Argentina and Brazil.

 

Argentina's biggest grains exchange slashed 5 million tonnes from its forecast for the country's drought-damaged soy crop on Thursday (Feb 23).