October 21, 2009

 

Asia Grain Outlook on Wednesday: Rice, soy prices may rise; stocks high

 

 

Rice and soy prices in Asia are expected to stay firm in the near term.

 

Expectations of bullish demand from the Philippines in the wake of recent storms are likely to support rice, while a reluctance among Chinese farmers to sell soy amid expectations of impending government support measures is helping push cash soy prices in China's major producing regions higher, participants said.

 

However, generally high global inventories of both grains ahead of approaching harvests could mean the upside potential for both rice and soy prices could be limited, they said.

 

China's government said this week that it would pay more attention rising soy import volumes--which increased 13% on year to 32.36 million metric tonnes in the first nine months of this year--that have hurt the interests of domestic farmers.

 

Though China has repeatedly stressed that it will curb blind expansion in the soy processing industry, the country's annual soy processing capacity now far exceeds the actual volume of soy processed each year, prompting the government to clamp down on capacity expansion by forbidding the construction of new soy processing plants.

 

Low-priced imported soy have led to overcapacity in soy processing in southern China, and this has further squeezed the market share of local crops, industry participants said.

 

Regional rice prices are also expected to stay firm in coming sessions due to an expected uptick in demand from the Philippines following typhoons Ketsana and Parma, though an initial tender for 250,000 metric tonnes of 25%-broken rice, which had been scheduled on Oct. 30, has now been delayed until Nov. 4.

 

Though Thai rice prices have remained relatively sluggish in the past week--with 25%-broken grade rice being offered little changed on week around US$417/tonne FOB basis--ahead of an approaching harvest due to get underway next month, Vietnam's equivalent grade has risen around US$10/tonne to around US$365/tonne on the back of bullish demand, traders said.

 

Tuesday, Vietnam's government said local firms have signed contracts to export 6 million metric tonnes of rice so far this year - a new record, thanks primarily to strong demand from African and Middle Eastern countries.

 

Vietnam exported 1.4 million tonnes of rice to the Africa in the first nine months of the year, up 98% from the same period last year, the government said in a statement, citing the Vietnam Food Association.

 

Export volumes to Middle Eastern countries rose 65%, to 250,000 tonnes, during the nine-month period, the statement said.

 

In other news, South Korea's state-run Agro Fisheries Trade Corp. said Wednesday that it has passed on a tender to buy 44,577 tonnes of non-glutinous brown rice due to pricing gaps, but will reissue the tender at a later date.

 

"The prices were too high," an official said. "We will reissue the tender, but the date has not been confirmed yet."

 

Separately, Agro Fisheries Trade Corp will tender for 45,000 tonnes of non-glutinous milled rice Thursday, while a further tender for 32,670 tonnes of non-glutinous milled rice has been scheduled for Oct. 28, the official said.

 

The arrival dates for the upcoming tenders are between March and June 2010, he said.