September 1, 2008

 

Asia Grain Outlook on Monday: Corn, soybeans may fall on Midwest rains
   

  

Corn and soybean prices are likely to keep falling in the week ahead, as rain in the U.S. Midwest improves the prospects of maturing corn and soybean crops.

 

Analysts are uncertain what kind of effect Hurricane Gustav, which was due to make landfall in the U.S. early Monday, will have on grain output as such a storm system could be beneficial if it pushes more rain to the Midwest. Meanwhile, if the storm wreaks havoc in the U.S. Gulf, American grain exports could take a hit, they said.

 

In either case, the storm's impact on prices is likely to be bearish.

 

In Asia, traders, analysts and top-ranking representatives of U.S. grain lobbies, such as the U.S. Grains Council and the American Soybean Association are meeting in Siem Reap, Cambodia, from Tuesday to discuss the near-term direction of grain prices, import plans of Asian buyers and the state of the U.S. crop.

 

Ahead of the conference, American Soybean Association regional director John Lindblom told Dow Jones Newswires that the marketing year that ended Aug. 31 was a challenging one, as high prices led to a 37.5% on-year decline in U.S. soybean exports to Southeast Asia, to 1.5 million metric tonnes.

 

Lindblom cited Indonesia buying around 400,000 tonnes less soybeans than it bought last year as a major reason for the fall.

 

Lindblom said he didn't expect a sharp fall in U.S. soybean prices in the near term, despite the upcoming U.S. harvest.

 

"Soybean prices are quite connected to crude oil prices, so to that extent, I don't see much of a chance of soybean prices falling too much," he said.

 

In other news, the secretary of India's Department of Agricultural Research said last Friday the country may exceed last year's record 96.43 million tonnes of unmilled rice output, the Press Trust of India reported.

 

"Rice production will surely touch a record this year on the back of the area sown and the overall crop condition as of now, even though floods in some producing regions have hit the crop," he said.

 

Flooding due to heavy downpours have damaged crops in several Indian states. The worst flooding has been in a key rice-growing state, Bihar, where over the past two weeks millions have been left homeless as crops and property sustained severe damage.

 

The extent of damage to rice crops in Bihar won't likely be assessed for at least two weekswhile the government focuses on rescue and relief operations.