October 22, 2007

 

Asia Grain Outlook on Monday: Wheat prices rebound, support corn

 

 

Asian buyers are likely to face higher wheat prices after the grain staged a rebound Friday from softer prices, following all-time highs in late September, analysts said Monday.

 

Chicago Board of Trade December wheat futures finished limit-up, or 30 cents higher, at US$8.55 1/2 a bushel. CBOT December wheat fell hard after hitting a record of US$9.6175/bushel Sept. 28.

 

Recent news of major wheat exporter Russia approving a 10% duty on wheat exports from next month, which may eventually be raised to 30%, sparked bullish speculation in wheat and expectations that importing countries will buy more wheat from the U.S.

 

However, a Singapore-based trader said other bullish factors - such as a smaller crop from drought-ridden Australia - have already been factored into the price of wheat.

 

"Without any further bullish factors other than Russia's announcement, wheat prices look likely to settle around US$8/bushel over the next few weeks," he said.

 

Tightness in the market before the arrival of U.S. wheat crops in July 2008 are likely to provide strong support for prices at that level, but prices are unlikely to approach past highs of near US$10/bushel in the near future.

 

China will be selling 200,000 metric tonnes of imported wheat from state reserves in an auction Thursday to meet domestic demand, said the China National Grain and Oils Information Center over the weekend.

 

The wheat rally is providing support for CBOT corn prices on speculative buying, despite a record 93.6 million acres planted this year. December corn settled 3 cents higher at US$3.70 1/4 per bushel Friday.

 

The CBOT soy complex ended lower Friday, led by soyoil as crude oil prices suffered a minor correction.

 

India's federal government announced Friday that government-run agencies will import 86,500 tonnes more edible oil to meet domestic demand and stem inflation. This is in addition to a purchase of 38,500 tonnes that has already been contracted, a statement from the food ministry said.

 

India's decision comes against a backdrop of rising global prices of edible oils such as soyoil and crude palm oil.

 

The benchmark January crude palm oil futures contract on the Bursa Malaysia Derivatives reached a record high of MYR2,795/tonne Friday, before a marginal downward correction.