July 23, 2008


Asia Grain Outlook on Wednesday: Corn may keep falling on crude, weather



Corn prices in Asia are likely to keep falling for the rest of the week, tracking a similar trend in Chicago Board of Trade corn contracts, which fell Tuesday on lower crude oil prices and favorable weather for the developing U.S. crop.


Analysts said corn seems to be following crude oil quite closely, and therefore a fall in crude prices may continue to negatively impact corn.


In Asia, bullish news emerged for soybean and soymeal prices from India. A renowned crop forecaster, Govindbhai Patel, told Dow Jones that summer-sown oilseeds output, sowing for which is ongoing, may fall 13.2% on year to 13.8 million metric tonnes.


"Except for the state of Rajasthan, all major oilseeds-growing regions have had poor rainfall in the current monsoon season," said Patel.


India is a major Asian supplier of soymeal, and any fall in India's soybean output will be bullish for soymeal prices in Asia. Patel said soybean output may fall to 9 million tonnes in 2008-09 from 10 million tonnes a year earlier.


However, at present, the dry weather doesn't seem to be impacting India's soymeal export prices. Wednesday, soymeal was available at US$490/tonne, free-on-board, Kandla port, down US$10 from two weeks ago.


In deals this week, Japan's Ministry of Agriculture continued its less-than-usual purchase of wheat in its weekly wheat tender concluded Tuesday, buying a total of 66,000 tonnes from the U.S. and Australia.


The department normally buys around 100,000-150,000 tonnes in its weekly tenders, though the reason for the lower purchases in the past two tenders isn't known.


In other grains, the price of rice is falling in Vietnam, while it's steady in Thailand, with traders saying that a price increase in rice seems very unlikely in the near future, as the market is well supplied while demand isn't too robust.


Vietnamese rice export prices fell 3.3% in the week ended Wednesday as bumper harvests boosted local supplies, said traders.


"Rice supply from the Mekong Delta region is rising, as farmers are intensifying their harvesting activities," said a trader with the Vietnam Food Association, which is based in Ho Chi Minh City.


A Bangkok-based trader said that while demand for Thai white rice is tapering off, it remains robust for parboiled rice, especially from Nigeria, which continues to make purchases.


In Vietnam, 5% broken rice is being quoted at US$725/tonne, free on board, down from US$750 last week, while in Thailand, the price of white rice is steady around US$800/tonne.

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