August 13, 2008
Asia Grain Outlook on Wednesday: Corn may stay rangebound post USDA report
Corn prices are likely to stay rangebound over the next few days as a bearish U.S. Department of Agriculture crop report has already been factored into prices.
The USDA report, issued Tuesday, estimated 2008-09 U.S. corn output at 12.288 billion bushels, up from a July projection of 11.715 billion bushels.
While Chicago Board of Trade corn futures ended higher in pit trading overnight despite the report, Asian analysts said prices are unlikely to rise further since there isn't much bullish news to underpin prices.
"CBOT corn futures are likely to be well supported at the level of US$5.10 a bushel (the price for the CBOT September contract Wednesday). Prices may slide a bit lower, but there's not much upside risk," said a Seoul-based commodities analyst.
He said overall sentiment for commodities remains quite negative, with a stronger U.S. dollar versus major currencies and portfolio readjustment hitting commodities prices globally.
He added that soybean prices are likely to slide further, too, and could find support at US$11.80-US$11.90/bushel. At 0643 GMT, the CBOT September soybean contract was trading at US$12.13/bushel, up 5.4 cents from the pit-trading close overnight.
Analysts said slower Asian demand for corn and soybeans will also weigh on prices this month.
China is unlikely to import more soybeans before the end of Olympic Games, as there have been reports of soybean crushing plants being temporarily closed for the duration of the Games to reduce air pollution, they said.
South Koreans mark a number of traditional holidays this month, and many traders have already gone on vacation. While South Korean companies have not covered their corn needs for the year - the result of high prices earlier this year - they are unlikely to do so this month.
According to traders in Seoul, however, the Korea Feed Association, one of the country's major corn buying groups, may seek up to 165,000 metric tonnes U.S. feed corn by the end of this month, which is a fraction of South Korea's annual feed corn imports of 8.8 million tonnes.
