July 10, 2009

Asia Grain Outlook on Friday: Soy rebound; focus now on USDA report

Soy prices on the bellwether Chicago Board of Trade have rebounded strongly following a recent steep fall, and may rise further in coming sessions on the back of strong U.S. export sales and a weaker U.S. dollar, but the market is now focusing on a key U.S. Department of Agriculture supply and demand report due later Friday, traders said.


The CBOT August futures contract settled Thursday 32.50 cents higher at US$10.4750 a bushel and continued to climb in electronic trading Friday, though at a slower pace and in relatively thin volume. At 0630 GMT in e-CBOT trading, August soy were up 8.00 cents at US$10.5550 a bushel.


Traders said recent steep falls on the CBOT may have left the market slightly oversold, but players are waiting to see the USDA supply-and-demand report to be issued at 1230 GMT, and the record surge in China's soy imports from the U.S. in June is threatening to oversupply China's domestic market.


"The limited scope for storage and swelling state reserves means that China is going to have to start releasing stocks, and I suspect that may start to happen sooner rather than later," said a trader in Singapore.


China's Ministry of Commerce said Thursday in a report on its Web site that it has estimated soy imports in June at 4.23 million tonnes, and revised its projection of July soy imports upward to 4.28 million tonnes from a previous estimate of 3.56 million tonnes.


If the July projection is accurate, it would be the highest volume of monthly imports ever by the world's largest soy importer, with June imports the second highest.


CBOT's corn and wheat futures also climbed Thursday, with traders attributing the rise to short-covering and technical buying ahead of today's USDA report.


At 0630 GMT, e-CBOT July corn was up 4.00 cents at US$3.4750 a bushel while July wheat was up 0.25 cent at US$4.9450 a bushel.


In other regional grains news, recent heavy rainfall in Western Australia has bolstered prospects for what could be the nation's largest-ever wheat crop, Richard Koch, managing director of Perth-based marketing advisory service Profarmer Australia, said Friday.


"At this stage we could have a wheat crop of anywhere between 10 million and 30 million" metric tonnes. "If we were to get good July and August rain, and a kind spring, certainly we could get a big crop here," he said.


Most official and private forecasts are in a range of 22 million-23 million tonnes compared with an actual 21.4 million tonnes from 13.5 million hectares in the last crop year ended March 31.

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