November 10, 2011
Asia's grains market to be affected by US crop data
A quiet Asian grains market will most probably be affected by US crop data that could cause a move in either direction yesterday (Nov 9).
This month's USDA numbers will be of particular interest as the market assesses the impact of the collapse of MF Global Holdings Ltd. and commodity investors dump agricultural futures.
Grains traders were concerned enough about potential volatility as investors shift their accounts from MF Global to other brokerages that they petitioned the USDA to delay the data. This was denied, and the figures will come out on schedule later in the day.
"Prices can move either way depending on the USDA's revised demand-and-supply numbers," Okato Shoji Co. deputy General Manager said.
A second trader in Tokyo said an increase in the USDA's yield estimates for corn and soy and carryover inventories, a fresh round of selling could extend recent weakness on CBOT.
Traders and analysts tipped near-month wheat and corn futures on CBOT to both move between US$6.40 and US$6.80 a bushel in the next few days. Wheat is currently trading around US$6.55 a bushel while corn is US$6.65 a bushel.
They expect soy to trade in a wider range of US$11.40-12.55 a bushel compared with US$11.94 a bushel now.
An increase in global production of grains has helped keep prices subdued.
The UN's Food and Agriculture Organisation (FAO) in its latest report forecast global cereals output to gain 3.7% to a record 2.3 billion tonnes this year.
"There is more grain in the world than what we thought 45-60 days ago but inventories of wheat, corn and soy are still tight," Kansas State University Senior Agricultural Economist said.
The economist also said that economic uncertainty and currency volatility are also keeping the market subdued, but any significant change flagged by the USDA in the demand-supply balance will be significant for prices.
The risk of further euro-zone weakness could affect grains for several more months, an Iowa-based MaxYield Cooperative analyst said.
Currency volatility could also prompt more selling of soft commodities by funds, traders said.
Standard Chartered said agriculture was the least popular class of commodities futures last week, with net long positions on US exchanges falling 5%, citing Commodity Futures Trading Commission data.