October 15, 2008


Asia Grain Outlook on Wednesday: Prices may consolidate after recent slide


Asian grain prices will likely continue taking cues from Chicago Board of Trade price movements in coming days, though prices may begin to consolidate before too long following recent sharp declines, Asia-based analysts said Wednesday.

"I think at this stage, we may see some pretty steady, rangebound trading as markets need to consolidate following on from recent limit-down falls, though the potential for further wide price swings is very much still present, as CBOT (grains) will continue to be heavily influenced by equities and other commodities," said a Tokyo-based grains analyst.

Rice prices may get a lift after the Philippine-based International Rice Research Institute Wednesday said world rice markets are likely to remain tight next year, despite an expected record harvest, after key producers clamped down on exports.

Rice prices tripled between last November and May, triggering riots in more than a dozen countries, before softening to still historically high levels of more than US$700 a metric tonne.

Still, CBOT rice futures settled lower Tuesday, with the November contract down 45 cents at US$15.80 1/2 a hundred weight, primarily weighed down by outside factors, said market observers.

In India, rice procurement slowed to 3.14 million tonnes as of Oct. 14 compared with 3.25 million tonnes a year earlier as farmers chose to wait for an upward revision in government-set prices, the Food Corporation of India said Tuesday.

However, the FCI, India's main procurement agency, said it expects rice procurement to be as good as last year. It procured 28.5 million tonnes of rice in the 2007-08 marketing year that started last October and ended in September.

In China, soybean output is expected to grow 37.5% on year to 17.5 million tonnes in 2008, according to the China National Grain and Oils Information Center.

In addition, more than 3.5 million tonnes of imported soybeans have been held at Chinese port warehouses since February, traders said, without elaborating.

Soybean futures traded on the Dalian Commodity Exchange settled sharply lower Wednesday after Tuesday's rally, tracking falls in outside markets and weaker crude oil prices. CBOT soybean futures also ended lower Tuesday, again weighed down by weakness in outside markets, traders said. The November soybean contract ended 32 cents lower at US$8.96 a bushel, the lowest level on continuation charts since August 2007.

CBOT corn and wheat contracts also succumbed to outside pressures to end Tuesday lower. The most-active December corn contract slipped 1/4 cent to settle at US$4.11 1/4 a bushel.

Corn will likely trade in a narrow US$4.00-US$4.30 range in the near term due to a general lack of fresh fundamental news, said the Tokyo-based grains analyst.

Meanwhile, CBOT's December wheat contract fell 15 1/2 cents to close at US$5.73 a bushel, just above its session low of US$5.71.

In other wheat news, an outbreak of plague locust nymphs in Southeast Australia will be dealt with in coming weeks and likely won't result in any major crop loss, Chris Adriaansen, director of the government's Australian Plague Locust Commission, said Wednesday.

"We've spent a lot of time planning, preparing and getting our resources together to ensure that we've got everything covered...there's no particular problem or issue there," he said.

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