July 30, 2008

 

Asia Grain Outlook on Wednesday: Corn may rise on heat concerns in Midwest

 

 

Corn prices may rise in the remaining days of the week, as some U.S. analysts have warned of heat and humidity risk to the U.S. crop in the next few days.

 

Adel Yusupov, the Kuala Lumpur-based regional director of the U.S. Grains Council, said corn prices will likely track weather forecasts until the U.S. crop harvest in September and October.

 

"Generally, drier weather is preferable for the crop right now, and that can pull down prices," said Yusupov.

 

He added the 2008 U.S. corn crop could be one of the biggest in history, despite being likely to fall 6% on year.

 

Yusupov said the increased adoption of genetically modified corn in the U.S. will likely ensure the current corn crop's yield is the second highest ever.

 

According to the U.S. Department of Agriculture, the country may harvest 300 million metric tonnes of corn in 2008 compared with 332 million tonnes in 2007, a record year, but private estimates peg this year's crop higher than 300 million tonnes, though lower than last year's crop.

 

Meanwhile, industry sources said Southeast Asian buyers are currently buying corn from Myanmar and even India, where corn exports were banned July 3. Older corn export contracts are still being honored in India and these shipments are making their way to Southeast Asian countries.

 

Also, Bangladesh has been a surprise entrant into the corn export market, selling corn at US$300/tonne to Southeast Asian buyers.

 

"Anyone buying corn from Bangladesh should be really careful about the quality. They are not a frequent seller," said an industry official.

 

U.S. corn prices have fallen sharply in the past few weeks, dropping around US$60/tonne, with U.S. corn now selling at US$340-350/tonne in Southeast Asia.

 

While the new U.S. corn crop booking is active in South Korea and Japan, it isn't as active in Southeast Asia.

 

Meanwhile, Japan's Ministry of Agriculture has decided to skip its weekly wheat purchase tender, preferring to hold a simultaneous buy-sell tender Thursday to buy 5,300 tonnes of food wheat for shipment until Dec. 31.

 

A part of the reluctance could be because the world is preparing to harvest a record wheat crop this fall, with Europe, U.S. and Australia all looking at big harvests. India has already harvested its biggest-ever wheat crop this year.

 

In other grain news, China's soybean imports are expected to slow in the second half of the year, after a scorching pace in the first.

 

"Soybean imports in the second half may be around the same level as a year ago, as accelerating inflation will curb consumption," said Gao Yunyue, an analyst at Dadi Futures Brokerage. China saw January-June soybean imports rise 24% on year.