Asia Grain Outlook on Monday: Buyers quiet as global wheat prices climb

 

 

Wheat prices are likely to rise in the coming sessions, supported by recent gains on the bellwether Chicago Board of Trade, while rising demand for flour and a fall in domestic supply are also pushing China's wheat prices higher.

 

However, recent gains in global wheat prices are damping buying interest, with importers opting for the sidelines amid general sentiment that prices could ease before long, with the focus expected to return to large global stocks, participants said Monday.

 

At 0628 GMT, wheat futures on e-CBOT were trading up 5 cents at US$5.44 a bushel, having risen Friday by 7.25 cents.

 

Traders said CBOT's gains have been driven primarily by fund buying on the back of supportive technical charts, stronger equity markets and weakness in the dollar, though the fundamental outlook remains weak due to large stockpiles and sluggish US exports.

 

In China, wheat prices rose in the week to Monday and will likely rise further still in the coming sessions on a fall in supply and rising demand for flour, which will likely increase further toward the end of the year due to holiday consumption, according to an analysis report published on Chinese Grain Web.

 

Prices in Shijiazhuang in Hebei province were at CNY2,080-CNY2,110 a metric tonne, up CNY20-CNY30 from a week ago, while prices in Dezhou in Shandong province were between CNY2,040-CNY2,050/tonne.

 

Processing plants and feedmeal plants increased purchases due to higher demand, while farmers were reluctant to sell amid rising prices and tightening supply.

 

The recent heavy snowfall in major wheat growing areas affected transportation and farmers' efforts to sell their crop, participants said.

 

In Australia, meanwhile, Agribusiness AWB Ltd. (AWB.AU) Monday held unchanged the estimated returns from pooled collective sales of benchmark wheat from the 2009-10 crop, saying that increases in U.S. wheat futures have offset the effects of a stronger Australian currency.

 

The return on Australian Premium White grade of 10.5% protein is estimated at AUS$255/tonne, free on board, for the Eastern Pool and AUS$250/tonne for the Western Pool, it said in a statement.

 

In other regional grain news, Philippine rice imports in 2010 may reach 2.25 million tonnes due to substantial crop losses following recent typhoons, a senior official of the National Food Authority said Monday.

 

NFA assistant Administrator Jose Cordero said crop losses from the typhoons amounted to 1.3 million tonnes of paddy rice equivalent to 845,000 tonnes when milled, while the annual shortfall is estimated at 1.4 million tonnes of milled rice.

 

Meanwhile, Indonesia will increase by 10% the amount it pays farmers for rice to mitigate the impact of higher fertilizer prices, which are expected to rise by around 40% on average due to a sharp reduction in government subsidies next year, the Jakarta Globe reported Monday, citing government officials.

 

Prices for subsidized urea fertilizer will rise the most, by as much as 50%, as the government cuts fertilizer subsidies in its 2010 state budget to IDR11.3 trillion from IDR17.5 trillion this year, Deputy Coordinating Economic Minister for Trade Edy Putra Irawadi said in the report.