June 16, 2008

 

Asia Grain Outlook on Monday: Prices may rise, tracking bullish CBOT

 

 

Grain prices are likely to keep rising this week on likely gains in Chicago Board of Trade corn and soybean futures.

 

Flooding in the U.S. Midwest has damaged both acres and yields of corn and soybean crops, sowing for which is in full swing.

 

At a time when global stocks of every grain are quite tight and demand is robust, the flooding has stoked prices of grains futures.

 

In Asia's morning trade, the CBOT July corn contract hit an all-time high, surpassing the previous high set in Friday's U.S. trading.

 

At 0549 GMT, July corn was at US$7.54 a bushel, up 22.2 cents from Friday's close.

 

CBOT's July soybean contract is 21.2 cents higher at US$15.81/bushel, while July wheat is trading 8.6 cents higher at US$8.90/bushel.

 

In Asia, the rising price of corn is already seeing some feedmillers seeking alternatives.

 

A trader in Seoul said South Korean feed companies are seeking to replace at least half their annual corn needs with feedwheat, which is roughly US$30-US$40/tonne cheaper.

 

South Korean buyers are likely to seek feedwheat from Eastern European countries for December shipment.

 

Meanwhile, a fall in ocean freight costs over the past week has also been ignored by South Korean buyers.

 

"Feed buyers in South Korea are looking at December shipments, as there are enough grain stocks until November, and freight costs generally soar in the winter months (due to increased coal traffic for heating needs), so the current fall in freight rates is of not much importance," said the trader.

 

In soybeans, Chinese traders bought very little last week on continued uncertainty about Argentine supply as a farmer-government tussle continues there, besides rising CBOT soybean futures.

 

According to JCI Shanghai, traders booked two to three soybean cargoes last week from the U.S. and Brazil for July-October shipment.