November 27, 2012

 

 

Due to tight supply in the Black Sea region, a fall in Australian output and dry weather affecting US winter plantings, Asian wheat prices are likely to move higher in the next few months.

 

They said fresh leads are also expected from traders, industry officials and analysts from a two-day international grain conference here that starts Tuesday (Nov 20). Wheat importers and flour millers from Southeast Asia are participating in the conference.

 

A delay in US wheat plantings and dry weather have made market sentiment bullish, said Kaname Gokon, deputy general manager at Tokyo-based brokerage Okato Shoji. He said there is upside potential of around US$0.20 a bushel in wheat futures in the next few days.

 

Near-month wheat futures on the Chicago Board of Trade are currently trading around US$8.52/bushel. Traders and analysts put resistance for this week at US$8.75/bushel.

 

It was mostly dry in the Hard Red Winter wheat planting areas in the US over the weekend, with just a few snow flurries over South Dakota, and the 6-10 day weather forecasts are calling for above-normal temperatures and below-normal precipitation, ABN Amro Bank said in a report.

 

Australia's wheat exports in the current marketing year that started October 1 are likely to fall to 17 million-18 million tonnes from 25 million tonnes in 2011-12, said Lachie Stevens, managing director of Victoria-based grain consultancy Lachstock Consulting.

 

The near-month CBOT wheat contract may test US$9.50/bushel in the first half of 2013, said Paul Deane, a senior agricultural economist

 

Around five million tonnes of the decline in exports will be of wheat that was used as animal feed by countries such as China, Vietnam, South Korea and the Philippines, Stevens said. Some of this demand has shifted to India, which is selling its surplus wheat from state reserves, but availability is limited.

 

In a tender issued in July, India sold wheat from government reserves around US$297/tonne, and in the latest tenders that closed Monday, the highest offers are US$322-324/tonne, free-on-board. Less availability of feed wheat is pushing up demand and prices of corn.

 

Importers who were earlier shunning US corn due to high prices are now placing orders for January-March shipment, traders said. US corn is now offered around US$345/tonne, basis cost and freight, East Asian ports compared with Australian Standard White wheat at US$360/tonne, C&F, for shipment in January. Indian wheat is offered around US$340/tonne, C&F.

 

Traders expect March corn futures on CBOT to test US$7.75/bushel in the next few days. The contract is currently trading around US$7.50/bushel. The premium of the CBOT March corn contract to May will gradually widen to more than US$0.10 a bushel from the current US$0.03, Gokon said.