May 3, 2012

 

Asian grain prices likely down on profit-taking

 

 

Due to long liquidation and profit-taking, Asian grain prices may fall in the next few days, with lower prices potentially spurring buying interest in the cash market, trade participants said Wednesday (May 2).

 

"Corn is already above US$6.50/bushel, while soys have just tested US$15/bushel and there is no reason for prices to scale further highs," said an importer in Tokyo.

 

The drought in South America and recent purchases of corn and soy by China has been factored into current prices, he added.

 

May wheat, corn and soy futures on the Chicago Board of Trade delivery are currently trading around US$6.27, US$6.55 and US$14.90 a bushel, respectively.

 

Traders say favourable weather during ongoing spring planting in the US, the world's largest exporter of agricultural commodities by volume, could put pressure on prices, with most tipping a decline of US$0.05-0.10 a bushel in prices this week.

 

Corn snapped three days of price gains Tuesday, and many traders say they expect the May contract to fall below US$6.50/bushel after breaching the level for the first time since April 10 on Friday (Apr 27).

 

Buying enquiries for corn and wheat have increased given signs that prices peaked earlier this week.

 

With overall fundamentals still strong, buyers are seeking opportunities to lock in some cargoes at relatively lower prices before another rally, said a Singapore-based executive with a global commodity trading company. Relatively low freight costs have also made purchases attractive.

 

The Taiwan Flour Millers' Association Wednesday purchased 25,500 tonnes of Dark Northern Spring wheat with 14.5% protein, 17,250 tonnes of Hard Red Winter with 13% protein and 13,750 tonnes of Western White grade with 9% protein at US$382.45/tonne, US$347.73/tonne and US$301.07/tonne, respectively, cost and freight.

 

The freight cost fell by 9.6% since an April 19 tender, to US$32.85/tonne. Free-on-board prices have declined 3% for Dark Northern Spring wheat, to US$349.60/tonne, in tandem with global prices amid a positive outlook in the US for the crop to be harvested in September.

 

South Korea's Major Feedmill Group purchased 58,000 tonnes of US corn from Archer Daniels Midland in a tender Wednesday, at US$295.85/tonne, C&F, for arrival by October 20.

 

With US corn prices below US$300/tonne, C&F, on a delivered basis in East Asian destinations, more purchases are likely, and Nonghyup Feed Inc. is also negotiating deals, said an importer in Seoul.