June 8, 2009

Grain prices in Asia are likely to remain firm in coming days, despite a profit-taking led decline in bellwether Chicago Board of Trade corn futures Friday, though the focus will now turn to a key monthly U.S. Department of Agriculture supply-and-demand report, which is due Wednesday.

 

 

U.S. Corn Belt Tightening

 

Concerns surrounding the corn crop in the U.S. following planting delays and unseasonably chilly weather across the country's corn growing belt, however, should lend support in coming sessions, Asia-based traders said.

 

In electronic trading Monday, e-CBOT's July corn contract was up 0.6 cent at US$4.44 a bushel. Observers said immediate resistance is likely at US$4.50.

 

China's Ministry of Finance said in a statement published on its Web site Monday that it has raised the export tax rebate on corn starch and ethanol to 5%, effective June 1; the ministry didn't provide the earlier rates for the products.

 

China's government has bought around 40 million metric tonnes of corn from last year's harvest to support corn prices amid recent weak demand and high supply, and has previously said it would help corn processing plants boost output - to help protect farmers' interests.

 

In other regional corn news, the Philippine National Food Authority will buy 300,000 tonnes of local yellow corn at a support price of PHP13 (US$0.27) per kilogram, up from the previous PHP11.50 (US$0.24) per kilogram, during this year's main corn harvest season in August, according to a U.S. Department of Agriculture report posted Friday on the Foreign Agricultural Services Web site.

                       

 

External Factors Buffet Wheat

 

Meanwhile, CBOT wheat prices also declined Friday, again on pre-weekend profit-taking and dollar strength.

 

Though July wheat recovered in Asian trading Monday - with e-CBOT's July wheat contract up 1 cent at US$6.24 a bushel - market observers said the grain will continue to be led primarily by external factors in coming sessions.

 

Wheat purchases by state-run Food Corp. of India between April 1 and June 7 rose by 11% on year to 24.15 million metric tonnes, a government official said Monday.

 

The federal government's local wheat purchase target is fixed at 24.40 million tonnes by end-June.

 

Meanwhile in China, farmers have now harvested almost half of this year's winter wheat crop, despite major producing areas experiencing thunderstorms and strong winds recently.

 

As of Saturday, about 48% of the wheat, or 11.03 million hectares, was harvested, the Ministry of Agriculture said in a statement published on its Web site over the weekend.