Asia Grain Outlook on Wednesday: Grains mixed; focus on US, Asia weather

 

 

Grains prices on the bellwether Chicago Board of Trade were mixed in Asia Wednesday, with rice and wheat futures marginally higher while soy and corn traded lower.

 

At 0530 GMT, e-CBOT's November soy contract was trading down 11.00 U.S. cents at US$9.48/bushel, having settled 4.50 cents higher in the previous session. CBOT soy's rise in U.S. trading Tuesday, helped by steadier crude oil prices, brought an end to a four-day losing streak.

 

Though the general outlook for soys remains mixed, with delayed crop development in some parts of the U.S. a generally supportive factor, favorable weather and crop conditions overall suggest the U.S. soy harvest may be even larger than the record 3.2 billion-bushel output the USDA projects, analysts said.

 

The U.S. Department of Agriculture Monday estimated 72percent of the U.S. soy crop had reached the pod-setting stage, behind the five-year average of 85percent, though scouts traveling across Nebraska on Tuesday on one route of the Pro Farmer Midwest Crop Tour reported "pretty good" corn and soy crops.

 

Separately, China's State Council is considering a plan to subsidize soy crushers in major producing regions in the northeast, the Sina.com information portal reported Wednesday.

 

The plan would give a subsidy of RMB200 a tonne. The move is being considered because soy has not sold well at government auctions, the report said.

 

The government has since July 21 offered to sell 2 million tonnes out of reserves of more than 6 million tonnes, but it has only managed to sell 19,900 tonnes, or less than 1percent, due to the high auction prices.

 

In India, the outlook for soy prices may turn softer in coming sessions due to the onset of rains in the top two producing states of Madhya Pradesh and Maharashtra, traders said

 

Corn prices on the e-CBOT also declined Wednesday - at 0530 GMT the December contract was down 1.20 cents at US$3.21/bushel - with traders citing generally favorable weather in the U.S. and expectations of a good crop for the decline.

 

The latest weekly USDA Crop Progress report, issued late Monday, showed U.S. corn crop conditions unchanged from the previous week. The report showed 19percent of the U.S. crop in excellent condition, 49percent in good, 22percent in fair and 10percent in poor to very poor condition.

 

Still, corn prices in China rose in the week to Wednesday, with tight supply dominating the market as farmers prepare to harvest a new crop in a couple of months, observers said.

 

China's corn prices are expected to remain stable in the near term, with weekly government auctions keeping the market on an even keel. The government Tuesday sold about half its targeted sale of 2 million tonnes of reserve corn.

 

In the longer term in Asia, the market will continue to monitor lower-than-average rainfall in some countries, notably China and India, that could crimp crop output in the coming months, analysts said.

 

While some research houses, including Standard Chartered, believe that prospects of a severe drought in crop producing areas could prompt more corn imports, from countries including the U.S., some said it's still not yet clear if the drought would badly affect corn supply in China, if at all.

 

Similarly, analysts remain divided over the impact India's poor monsoon rains could have on global rice prices in the months ahead. Though the lack of rain is expected to curb the country's rice output, some analysts say ample stockpiles as a result of India's rice export ban will likely compensate for any shortfall.

 

India's Farm Minister Sharad Pawar Wednesday said the country's summer-sown rice output may fall by 10 million tonnes due to deficient monsoon rains.

 

"Some shortfall of production of sugar cane and oilseeds is also expected," he said.

 

The annual monsoon, which is key to the country's crops as 60percent of the fields are rain-fed, has been deficient this year. Rains were 29percent below normal during June 1-Aug. 12.

 

"Everyone seems to be focusing on weather patterns at the moment," said Darren Cooper, senior economist with the London-based International Grains Council.

 

"Nevertheless, concerns are countered by (India's) large government stocks following heavy state procurement and limited export sales," he said.

 

"The market will also look to Thailand, which has stocks of around 7 million tonnes of milled rice - that is almost 25percent of world trade in any calendar year. With India's stocks, too, that is a lot of rice," Cooper said.