March 10, 2008

Asia Grains Outlook on Monday: Prices may rise as industry buys on dip

The grains complex is likely to recover this week from Friday's slump on industry buying, traders said Monday.

Corn, soybean and wheat contracts on the Chicago Board of Trade were hit by a wave of profit-taking Friday.

May soybeans settled 50 cents lower at US$14.08 and 3/4 per bushel, May corn settled limit-down, or 20 cents lower, at US$5.47 and 1/4 per bushel and Minneapolis Grain Exchange May wheat closed limit-down - 60 cents lower - at US$13.19 and 3/4 per bushel for the fifth consecutive day as the market continued to pull back from high prices.

However, the market fundamentals are still firm, said a Singapore-based trader.

"The market was driven down by fund selling as there was no significant change in demand or supply. The overall outlook is still bullish," he said.

Last week, China announced it would control the industrial use and reduce the export quota of grains to curb domestic price increases. The country has been a net exporter of wheat, corn and rice in the past two years. Analysts said the move should add stability to the world grain market.

Last week, Australia's Bureau of Agricultural and Resource Economics forecast the wheat crop would jump to 25.95 million metric tonnes this year, up from 13 million tonnes last year. However, farmers remain skeptical of such a bumper crop given the ongoing drought in the country.