September 8, 2011

 

Asia's grain prices to remain consistent

 

 

Asia's grain prices are likely to stay at present levels as investors look for new leads, according to trade participants.

 

According to Dow Jones, a Melbourne-based trading executive said that many traders have already factored in lower US corn yields but are still awaiting the monthly supply-demand from the USDA.

 

Some private analysts have estimated US corn yields as low as 143-147 bushels an acre, compared with 153 bushels by the USDA last month. The department's estimate is scheduled for a revision Monday (Sep 12).

 

However, a trader in Singapore said corn prices may actually fall if USDA estimates are above expectations.

 

Around 0236 GMT, the most active December corn and wheat contracts on CBOT were trading US$0.02 and US$0.0425 higher at US$7.5775 a bushel and US$7.6425 respectively, having erased some overnight losses. November soy was US$0.045 higher at US$14.27.

 

Most traders and analysts expect prices to move either way up to US$0.15 /bushel in the next few days.

 

"Fundamentals are supportive but a stronger dollar is weighing on prices," a Singapore-based executive with a global commodities trading company said.

 

A stronger dollar makes US commodity exports more expensive and drags down prices. It also prompts investors to move funds to currency markets from commodities. The US is the world's largest exporter of agricultural commodities, selling millions of tonnes to buyers in Asia.

 

Due to recent heat stress, the share of agricultural crops in good-to-excellent condition is sharply lower this year.

 

Physical buyers in Asia are looking for the best possible deals. Traders said Archer Daniels Midland sold four corn cargoes totalling 220,000 tonnes to buyers in South Korea's Major Feedmill Group and Korea Feed Association for November arrival at US$362.90/tonne, basis cost and freight.
 

The price is a attractive one as it is difficult to get offers below US$370/tonne, C&F, a Seoul-based importer said.