September 29, 2008

Asia Grain Outlook on Monday: Prices may fall; financial crisis weighs


Asian grain prices may fall in the week ahead, tracking the (likely weak) tone of Chicago Board of Trade grains futures.


CBOT grain futures have been falling since Friday, as fundamentals have taken a back seat to concerns about the U.S. financial crisis.


The commodities market seems to be taking its cue from stock market gloom as traders ponder whether a phased bailout plan in the U.S. is what it will take to resolve the crisis.


So, over the next several days, the tenor of grain futures will likely be decided by what happens in the broader global economy.


At 0526 GMT, the December corn contract was down 11.6 cents from Friday's pit-trade close, trading at US$5.31 a bushel; November soybeans were down 27 cents, at US$11.37/bushel.


The December wheat contract was down 9.6 cents, at US$7.06/bushel.


In terms of grain fundamentals, nothing significant is expected over the next few weeks, barring early frost developing in the U.S. Midwest, which would impact development of the corn and soybean crops.


In more bearish news, specifically for the oilmeal market, India's soybean output is likely to touch an all-time high of 10.7 million tonnes in 2008, up from 9.46 million tonnes in 2007, according to the Central Organisation for Oil Industry and Trade, an industry association.


"The higher production estimate is due to increased area under cultivation and improved yields, of around 850 kilograms to 1,000 kilograms per hectare," said D.S. Sridhara, president of the association.


Higher production of soybeans will likely increase India's soymeal production and exports, and put downward pressure on soymeal export prices. India is one of the world's major soymeal exporters, with several Asian countries preferring to buy Indian soymeal to U.S. or South American varieties due to cheaper freight costs.

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