November 6, 2009


Asia Grain Outlook on Friday: Corn, wheat, soy prices fall; rice stays firm



Grain prices in Asia will likely remain mostly under pressure in the coming sessions, tracking generally bearish sentiment in Chicago Board of Trade futures, traders said Friday.


CBOT corn, wheat and soy futures declined in U.S. trading overnight on a combination of dollar strength and an improved weather outlook that should favor U.S. harvesting.


Thursday, CBOT December wheat fell 8.75 cents to US$5.12 a bushel and December corn fell 7.50 cents to US$3.76/bushel, while the November soy contract fell 28.50 cents to US$9.67/bushel, and traders in Asia said more downside appears likely in the coming sessions, with demand for U.S. wheat particularly low due to its current high price.


In India, the federal government may lower the price of wheat being sold from its stocks in the open market to boost sales to bulk consumers, the Financial Express newspaper reported Friday.


The government in late October offered to sell 500,000 metric tonnes of wheat from its reserves to bulk consumers, which was priced above market rates. Wheat futures touched an all-time high last week following the move.


"The basic idea behind the new formula is to reduce the cost of wheat by INR150-INR300 per 100 kg, which will make it attractive for bulk buyers," the report quoted a government official as saying.


In Australia, meanwhile, a forecast for national wheat production was held unchanged Friday at 22.8 million tonnes, even while Western Australia's output forecast was downgraded and South Australia's was upgraded.


Rabobank Australia held its estimate and said there's "some potential for upward revisions if the harvest remains broadly trouble free."


Despite the general bearish outlook for most grains, rice prices remain in bullish mode on firm technical charts and lingering supply worries, with demand in Asia likely to increase due to an earlier drought in India and typhoon damage in the Philippines, participants said.


The Philippines on Friday bought 250,000 tonnes of rice from Vietnam Southern Food Corp. and trade house Daewoo International Corp. to shore up the country's domestic supply next year.


The state-owned National Food Authority signed a deal to buy 100,000 tonnes of 25% broken grade from Daewoo at US$468.50/tonne, cost and freight basis, and another contract to purchase 150,000 tonnes of the same grade from Vietnam Southern Food Corp., or Vinafood 2, at US$480/tonne, C&F.


In Thailand, the world's largest exporter, rice prices continued to rise this week and are likely to rise further still in the days and weeks ahead, despite the main harvest now being underway, said a trader in Bangkok.


Friday, Thai white 5% broken rice was being offered at US$510/tonne, FOB basis, up US$15 from a week ago, supported by expectations of strong Asian demand and the implementation of a new purchase program, under which the government has said it will buy up to 2 million tonnes of paddy directly from farmers.


Meanwhile, Australia's rice production in the 2009-10 crop year will recover somewhat as a result of increased availability of irrigation water, according to a grains report issued late Wednesday by the New South Wales Department of Industry and Investment.


Plantings this crop year ending March 31, 2010 should reach around 20,000-22,000 hectares for production of 180,000-200,000 tonnes, about three times the output in 2008-09, according to the report.


Rice production in Australia peaked in the 2000-01 crop year at 1.64 million tonnes but fell to 19,000 tonnes in 2007-08 due to a shortage of irrigation water.


The increased domestic production in the 2009-10 crop year is likely to reduce Australia's need to import rice.


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