July 9, 2008

 

Asia Grain Outlook on Wednesday: Corn may fall on U.S. weather, crude oil

 

 

Corn prices in Asia may fall further this week on better weather forecasts in producing areas in the U.S., and a decline in New York Mercantile Exchange crude oil futures, traders and analysts said.

 

Chicago Board of Trade corn futures fell in the last two sessions, as forecasts rule out intense heat wave and unusual dryness in the U.S. corn belt over the next 10 days.

 

Still, the decline won't be enough to attract buyers as prices, which surged to a record US$7.60 a bushel for July on June 26, are still high. India's decision to ban exports to cool local prices may curb availability, limiting the fall in prices.

 

South Korean millers who make animal and poultry feed are planning to buy feed wheat this month instead of corn to save on costs.

 

A trader in Seoul said feed millers may book a few cargoes of Ukrainian feed wheat this week, if they get price offers of US$370-US$380/metric tonne, which will work out to be US$30/tonne cheaper than U.S. corn.

 

Last month, South Korean feedmillers bought 110,000 tonnes feed wheat at US$370/tonne, cost and freight basis.

 

High freight costs may also discourage traders from buying grains, the trader said.

 

"Ocean freight costs have come down a bit in the last few weeks, but it is not much. Freight is still around US$120-US$125/tonne for the U.S. Gulf-South Korea route, which is quite high," said the trader.

 

In other news, India's soymeal exports more than doubled in the first quarter of the fiscal year beginning April 1, according to latest data released by the Solvent Extractors Association of India, or SEA, Tuesday.

 

Soymeal exports in April-June surged to 1.11 million tonnes compared with 424,900 tonnes a year earlier.

 

"A farmers strike in Argentina led to low availability of soymeal for global markets, diverting demand to India," said B.V. Mehta, executive director of the SEA.

 

Currently, India is sowing the new soybean crop, with the total sown area so far being higher than a year ago. While slack rains last week slowed sowing, industry officials said expectations of better rains over the rest of this month will be enough to complete sowing by the end of this month.