April 10, 2012

 

Asia corn, soy prices buoyed by firm fundamentals

Corn and soy prices will be bolstered by firm fundamentals in the coming week, as trade participants eagerly anticipate the USDA supply-demand report due Tuesday (April 10).

 

The USDA's report will encourage investors to focus on fundamentals rather than take cues from the broad equities market, Kaname Gokon, Tokyo-based deputy general manager at brokerage Okato Shoji, said.

 

In the corn market, supply concerns dominate due to cold weather in the US midwest, increasing the risk of frost during the planting season, which has just begun, Gokon said.

 

This adds to concerns about US inventories, which are likely to be 36% lower at the end of the marketing year ending August 31, adding to concerns about tight supplies, analysts polled by Dow Jones Newswires said.

 

Analysts on average expect the USDA report to forecast domestic corn stocks as on August 31 will be 717 million bushels, compared with 1.128 billion bushels a year earlier and the department's previous prediction of 801 million bushels.

 

Estimates by 16 analysts ranged from 626 million bushels to 801 million bushels.

 

Gokon tipped Chicago Board of Trade's May corn to test US$6.80 a bushel this week. CBOT May corn futures, the most actively traded contract, ended up 1 1/2 cents at US$6.58 1/4 a bushel Thursday (April 5). CBOT agricultural markets were closed Friday (April 6).

 

The soy market is being supported by Chinese demand.

 

Gokon tipped CBOT May soy to test US$14.685 a bushel this week. Soy futures for May delivery, the most actively traded contract, closed 14 1/2 cents higher at US$14.34 a bushel Thursday (April 5).

 

The USDA reported weekly net sales of 1,112,900 tonnes of soy. Analysts expected total sales between 570,000 tonnes and 1 million tonnes.

 

China's soy imports in March may stay at elevated levels as feed mills step up soymeal purchases, estimated around 5.1 million tonnes by the Ministry of Commerce in late March. Imports may then taper to 3.9 million tonnes in April.

 

China's preliminary March trade data, including soy import volume, are expected Tuesday (April 10).