March 19, 2010

 

Asia Grain Outlook on Friday: Prices likely subdued on Argentina sales

Asian grains prices are likely to remain subdued early next week due to aggressive sale efforts by Argentina and Brazil, where bumper crops are expected, trading executives said Friday.

 

South American grain exporters are keen to sell grains to avoid storage costs, and Southeast Asia is a major destination, a Singapore-based exporter said.

 

"The latest crop size estimates indicate that production in Argentina is on expected lines (at record levels)," he said.

 

Argentina's Agriculture Ministry made its first forecast for 2009-10 soy production on Thursday, pegging output at between 51 million and 55 million tonnes. That would beat the previous record in 2006-07 of 48.8 million tonnes by a wide margin. Production last year was a paltry 32 million tonnes due to drought.

 

"CBOT prices may come under pressure due to both stronger dollar and ample supplies in South America," an importer in Japan said.

 

Soy prices may fall below US$9.50/bushel again, he said. The May soys contract on the Chicago Board of Trade ended Thursday up a marginal 1/2 cent at US$9.59 1/2 a bushel.

 

Recent corn sales by Argentina may also weigh on prices, but delivery costs to Southeast Asian remain high due to a rise in ocean freight rates, the importer said.

 

Japan continues to source its corn requirements from the U.S. because of the higher freight costs from Argentina, traders said.

 

CBOT May corn futures ended up 2 cents at US$3.76 a bushel Thursday.

 

Traders expect prices to be around US$3.60-US$3.70/bushel early next week.

 

Prices have been remaining around current levels due to speculative short covering, but fundamentals remain weak, they said.

 

Argentina's corn output is expected to bounce back to 21 million tonnes from 12.6 million tonnes last year. The country is the world's third-largest corn exporter.

 

"Buyers and sellers are wary of possible logistical bottlenecks (such as) workers' strikes or unforeseen government restrictions, and therefore want to ship out as much volume as possible at the earliest (possible time)," a commodities broker in Buenos Aires said.

 

Argentina has sold several cargoes of corn, soymeal, soys and soyoil this month to buyers in Southeast Asia, trading executives said.

 

"Deals are being transacted almost daily and large volumes (of soymeal and corn) are due for shipment from Argentina (to Asia) soon," a Singapore-based executive of a global trading company said.

 

Three cargoes with a combined 73,000 tonnes of corn are likely to be shipped to Malaysia over the next two weeks, he said.

 

Vietnam has bought two cargoes, one of 25,000 tonnes and one of21,000 tonnes, for shipment by end of this month or the first week of April, he said.

 

At least 175,000 tonnes of corn is scheduled for shipment to Southeast Asian destinations in the period from late March to early April, the broker in Buenos Aires said.

 

In the next two weeks, a total of 168,000 tonnes of soymeal will be exported to Indonesia, Malaysia, South Korea and Singapore, he said.