August 9, 2011
Falling Asian grain prices may spur dip buying
Asian grain prices will likely dip this week, which could accelerate trading in the physical market, traders said Monday (Aug 8).
Standard & Poor's downgrade of the US's sovereign debt rating could present the dip-buying opportunity Asian importers have been on the lookout for since prices surged last July.
Traders said grain prices may rise again if the USDA's monthly supply-and-demand report, to be issued Thursday, is bullish - possibly boosting physical buying in the next two or three days.
The most active CBOT wheat and corn contracts for December delivery Monday fell 1.8% and 2%, respectively, to US$7.10 a bushel and US$6.89/bushel. November soy fell 1.5% to US$13.16/bushel. Most traders expect further downside of around 10-15 cents a bushel in the grains futures complex.
Taiwan bought a cargo of 60,000 tonnes of Brazilian soy Friday. Meanwhile, Bangladesh is seeking 50,000 tonnes of parboiled rice in a tender that closes Monday.
South Korean importers are planning a slew of tenders this week to import feed grains, reports said.
CBOT corn is now around 15% off the record highs it hit in June and though still sharply higher than a year ago, it may still be a good buy, traders said.
Rains in the US Midwest, which had been reeling under excessive heat in recent weeks, are also weighing on grains prices.
However, if the USDA lowers, or even maintains, its corn acreage estimate, it may push prices up again, experts warned. Corn plantings were reduced this spring due to wet weather.
Net speculative long positions in corn on CBOT rose 8.6% in the week ending August 2, ANZ Banking Group said in a research note.
Traders said lingering concerns over the debts of some EU countries has weakened the euro against the US dollar again. A stronger US dollar can curb US exports, weighing on grain prices.
The US is the world's largest exporter of agricultural commodities, selling millions of tonnes a year of grain to Asia.