July 23, 2011

 

Asian grain traders hold back from signing US deals

 

 

Asian physical traders are watching very closely for signs of cooler weather in the US Midwest before committing to deals, trade participants said Friday (Jul 22).

 

Grain trade in Asia has been slow in recent weeks due to seasonal factors and as US corn and soy futures rallied due to weather concerns, after a severe heat wave swept through the Midwest. The heat is particularly adverse for corn as the crop is in pollination season.

 

"There are still no tenders for next week from Korea Feed Association as prices remain high," a trading executive in Seoul said.

 

The association, which is South Korea's largest grain-buying group, will likely start buying once prices decline significantly, he said.

 

"We are all watching the weather closely and clarity may come in the next week or two," Okato Shoji deputy general manager Kaname Gokon in Tokyo said.

 

US grain futures fell Thursday as forecasters predicted that cooler, wetter weather would temporarily reduce heat stress on crops.

 

Corn set the tone for the grains, pulling back for a second day after reaching a five-week high Tuesday amid concerns that a severe Midwest heat wave was reducing output. The market has factored in worries about crop losses and cooler weather is expected this weekend, analysts said.

 

Weekend weather will be better in that it won't "continue to be 95 to 100 degrees," Joel Burgio, a meteorologist for private firm Telvent DTN, said. "Some areas will get scattered showers."

 

Corn for December delivery, the most actively traded contract, fell US$0.04 3/4, or 0.7%, to US$6.73 a bushel at the CBOT.

 

Okato Shoji's Gokon tipped December corn to move in a US$6.70-$7.00/bushel range next week, with cues coming from unpredictable weather.

 

Singapore-based brokerage Phillip Futures said Friday that weather concerns will be the key fundamental directing price.