October 24, 2007

 

Asia Grain Outlook on Wednesday: Wheat, corn prices fall; lower oil weighs

 

 

Asian grain buyers may find some reprieve in the days ahead after wheat futures fell sharply to close limit down on the Chicago Board of Trade Tuesday, after recording strong gains in the previous two sessions.

 

CBOT December wheat closed limit down, or 30 cents lower, at US$8.41 per bushel, while CBOT March wheat also finished 30 cents lower at US$8.61 1/2. Corn futures also declined, with the CBOT December contract shedding 3 1/2 cents to close at US$3.61 per bushel.

 

CBOT wheat prices had rallied on Friday and Monday, with sentiment lifted by market talk that Russia may hike its export duty to as much as 50%, but disappointment set in after no announcement came, analysts said.

 

Russia has approved a 10% tariff on wheat exports, which will take effect next month.

 

Meanwhile, lower crude oil futures dragged sentiment down, while the re-emergence this week of volatility on global equities markets created a cautious mood, traders said.

 

In other news, Philippine-based feed millers and raisers of poultry and livestock plan to buy 70,000 metric tonnes of corn in a tender to be held in early November by the National Food Authority, a feed miller industry official said Tuesday.

 

The planned tender follows a decision by local end-users to reject offers made Tuesday at an auction for the supply of 70,000 tonnes of corn due to high prices.

 

The lowest offer was made by Toepfer International Asia at US$304.50/tonne on a cost-and-freight basis for Thai corn.

 

Meanwhile, a senior Australian diplomat denied recent media reports that the nation has shipped poor quality red wheat to India.

 

"India has only imported white wheat from Australia. The red wheat to which media reports refer is therefore clearly not Australian wheat," David Holly, Australia's acting high commissioner to India, said in a statement issued through the mission in Delhi.

 

After a five-year hiatus, India resumed importing Australian white wheat from April 2006 to March this year but has since stopped due to a lack of availability owing to drought.

 

Australian wheat production is facing another poor year, with the industry focusing on a crop of about 12 million tonnes, up from an actual 10 million tonnes in 2006, but still only about half of the 25 million tonnes produced in 2005.

 

Some wheat-growing areas in South Australia have received rain in recent days, which could benefit some of the crops to be harvested late in the year in the far south and adjoining areas in Victoria state, said James Rackham, deputy chairman of the grains group South Australian Farmers' Federation.

 

However, the rain has come too late to benefit crops in early sown areas and in western growing areas, such as on the Eyre Peninsula, where crops are already being harvested, he said.

 

Although wheat supply is expected to remain tight until the arrival of U.S. crops in July 2008, prices are unlikely to approach past highs of near US$10/bushel in the near future as most bullish news - such as a smaller crop from drought-ridden Australia - has already been factored into the market, traders said.