August 16, 2011


Asian grain prices to increase amid limited supply



Due to concerns over limited supply, Asian grain prices will probably increase this week, according to trade participants on Monday (Aug 15).


Dow Jones also said that the USDA's reduced corn and soy production estimates will contribute to higher prices, said an importer in Kuala Lumpur.


The most active wheat and corn contracts for December delivery at CBOT were US$0.0775 and US$0.055 higher, respectively, at US$7.40/bushel and US$7.20/bushel. November soy was US$0.0975 higher at US$13.445/bushel. Most traders said they expect further gains of around US$0.10-0.20 a bushel in the grains futures complex within the next few days.


Prices will rise when the US markets open for business on Monday (Aug 15), said a Singapore-based grain trader.


Many traders missed out on an opportunity to lock in relatively low grain prices during last week's dip, which reflected spillover weakness from selloff in other asset classes amid weakness in the global economy, he added.


Traders across Southeast Asia said many among them kept to the sidelines, expecting a further downward correction, but projections of tight supply in the US helped spur a price rally, frustrating their plans.


The USDA lowered its estimate for US corn output in the marketing year that begins September 1 to 328 million tonnes from 342 million tonnes and cut its estimate for soy in the marketing year that begins October 1 to 257 million tonnes from 261 million tonnes.


Since fundamentals are strong, many investors are setting up fresh long positions on CBOT, said a deputy general manager at Japanese commodity brokerage Okato Shoji Co., who said CBOT December corn could hit US$7.50 this week.


After liquidation earlier this month, net speculative long positions in CBOT soy futures, as of August 9, total barely 5% of open interest, according to data from the Commodity Futures Trading Commission. Traders said there is scope for fresh buying this week.


Net long positions in corn stood at 199,000 contracts, down 1.5% from a week ago.

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