September 17, 2007

 

Asia Grain Outlook on Monday: Prices may rise on bullish CBOT trend

 

 

Prices of imported grains in Asia are likely to rise in the week ahead on the bullish trend for corn, soybeans and wheat on the Chicago Board of Trade.

 

All three commodities ended with gains Friday. For soybeans, prices are rising on the back of fears of frosty conditions in parts of the U.S. Midwest, where late-planted soybeans are susceptible to damage.

 

Since soybeans and corn are competing animal feed products, higher soybean prices also pushed up corn Friday, and while corn may make some more gains this week, they will likely be capped by the huge corn crop being harvested in the U.S.

 

For wheat, the story has been one of relentless gains, as prices have risen 85% since May. Last week, wheat futures took a hit as traders booked profits after wheat failed to hang on to US$9 a bushel, a key psychological resistance level.

 

However, in Monday's Asian trading hours, wheat bounced back sharply, largely on reports that rains in Australia's wheat growing areas have been quite scant, which will add more pressure to the wheat crop there.

 

At present, the most-active December CBOT wheat contract is at US$8.73/bushel, up 27 cents from Friday's U.S. close.

 

In the rest of Asia, South Korean buyers said corn buying is likely to be slow over the next several weeks.

 

"Most South Korean feedmill companies have enough corn stocks until January, so no one's in a hurry to buy more corn," said the manager of a feedmilling company in Seoul.

 

He added that ocean freight costs are continually rising for the U.S. Gulf-South Korea route, which is making corn imports more expensive.

 

However, traders said one major South Korean feedmilling company, Nonghyup Feed Inc, may float a tender to buy optional-origin corn this week to shore up its stocks.