October 11, 2011


Asian grain prices likely to increase



Amid anticipation that EU zone countries will reach an agreement to withstand the debt crisis, Asian grain prices will probably get support from physical demand and a USDA report could push its prices higher, trade participants said.


Wheat, corn and soy prices may gain US$0.10-0.20 a bushel early this week, they said, after benchmark futures contracts hit multi month lows on the Chicago Board of Trade last week.


The most-active December wheat and corn futures on CBOT are around US$6.22/bushel and US$6.11/bushel, respectively, while November soy are around US$11.83/bushel.


China may lock in a few more cargoes of corn given the grain is still relatively inexpensive, said a Singapore-based executive of a global commodities trading company.


Last week, US No. two yellow corn was offered around US$317-320 a tonne, cost and freight, to Chinese buyers for shipment in January, he said.


Traders didn't confirm any specific deals, but said price levels are quite attractive for China to finalize import deals and replenish reserves, considering that rates were upwards of US$385/tonne, C&F, in June.


Investors are treading carefully ahead of the USDA's monthly report on supply and demand Wednesday.


A corn importer in Tokyo said that lately there have been a few surprises in USDA statistics, and with uncertainty looming over production levels, many investors don't want to take any chances, and short covering will push prices up.


Other traders said grain harvest pressure is gathering momentum in the US--the world's largest exporter of agricultural commodities--and any gains will only be temporary.


There are indications that US corn and soy yields will be higher than government estimates, which is bearish in the medium term.


Back in Asia, the lowest offer in a Bangladesh tender to import 50,000 tonnes of wheat was US$274.10/ton, cost, insurance and freight.


Traders expect wheat of Black Sea origin to be supplied in the tender.


Black Sea wheat is the cheapest available, and with the Australian harvest around the corner, global prices will likely be under pressure, said a trader in Dhaka.