Asia Grain Outlook on Wednesday: Grains rise in Asia; soy outlook firm
China's robust purchases, prospects of drought and lower U.S. ending stocks translate into a solid outlook for global soy prices, though an expected policy move in India's Madhya Pradesh state could damp domestic prices there.
Soy futures received solid underpinning support early in yesterday's U.S. session, buoyed by export demand on confirmed soy sales to China. In addition, concerns surrounding a drought in China's soy growing regions provided a boost to briefly propel soy contracts to 10-day highs.
At 0354 GMT, e-CBOT's November soy contract was up 5.00 U.S. cents at US$10.04/bushel.
"Front month CBOT soy prices were the strongest performer. While CBOT corn and wheat prices have eased soy prices remain robust," Barclays Capital said in a daily commodities report.
"We continue to view the soy market favorably on continued strong U.S. export sales into China and a tight (U.S.) old crop," BarCap said.
In India, however, traders said National Commodity and Derivatives Exchange soy futures may turn weaker in the near term amid concerns that the Madhya Pradesh government may impose stock limits on soys and edible oil.
"This will weigh on prices as most (of India's) soy processing plants are in the state, and they may have to limit their stocks," said a trader in Indore.
USDA Report May Weigh On Rice
U.S. rice prices could come under pressure in coming sessions after a U.S. Department of Agriculture report this week said the U.S. harvest is 10% complete compared with the average of 14%. Harvesting in Louisiana and Texas is complete, and analysts said yields in the two states have been good so far.
Rice prices at CBOT rose Wednesday. At 0400 GMT, e-CBOT's September contract was trading 9.50 cents higher at US$13.57/hundredweight following a sluggish, rangebound overnight session in the U.S.
Rice market participants will also continue to focus on India's monsoon rains in the coming weeks as a potentially bullish factor, traders said.
India's summer plantings of rice and other crops shrank this year due to poor monsoon rains, raising fears that food prices may continue to rise in Asia's third-largest economy.
Government data released Tuesday showed the area under rice fell 20% to 27.2 million hectares from June 1 to Aug. 20 compared with the same period last year - due to less rainfall in states like Uttar Pradesh and Bihar.
Japan Seeks Grains, Korea buys Corn
Japan's Ministry of Agriculture is seeking 69,600 metric tonnes of feed wheat and 38,200 tonnes of feed barley in a simultaneous buy sell, or SBS, tender which is due to close Friday, a ministry official said Wednesday.
Under the SBS system end users can negotiate as a group on the price, quantity and origin of the grains before submitting their bids to trading firms via the agriculture ministry.
Meanwhile, South Korea's Nonghyup Feed Inc. bought 110,000 metric tonnes of U.S. corn for March delivery in a tender concluded late Tuesday.
The first cargo was purchased at a price of US$1.7288/bushel over CBOT's March 2010 corn contract while the second was purchased at US$1.7388/bushel over the same contract. Both cargoes were purchased from U.S.-based grains merchant ADM on a cost-and-freight basis, said a trader with Nonghyup.
Tuesday, CBOT's March corn contract settled at US$3.36/bushel.