December 1, 2011


Asian grain prices face downward pressure on fading investors' interest



The grain prices in Asia is possibly to go under downward pressure in December as investors' interest diminish and abundant stocks surface in the physical market, trade participants said.


Wheat, corn and soy prices may fall US$0.10-15/bushel in the next few days, they said.


Near-month wheat and corn futures on the CBOT are currently both trading around US$5.90/bushel. Near month soy are around US$11.15/bushel.


Many investors are reluctant to set up fresh long positions in agricultural commodities due to a dearth of capital as the global economy is in recession mode, Okato Shoji Co. deputy General Manager Koname Gokon said.


Another trader in Japan said a stronger dollar is prompting investors to move to currency markets.


It is also making dollar-denominated commodities more expensive, resulting in a commensurate decline in prices.


The ongoing harvest of crops in several countries, including the US and Australia, is also weighing on prices.


Prospects are good for farm plantings in South America due to favourable weather and Brazil and Argentina are both heading for another bumper crop of grains, Gokon said. Soy prices may even fall below US$11 a bushel early next month, he added.


Brazil is heading for a second successive bumper soy harvest of more than 72 million tonnes in the marketing year from October 1, International Grains Council said last week.


The country's exports may rise 23% this year to 36.8 million tonnes, while Argentina's soy exports may rise 30% to 12 million tonnes, IGC said.


In corn, non-traditional exporters such as Ukraine have offset tighter US supply. But demand is thinning due to relatively high prices.


For several weeks now, corn traded at a premium to wheat on CBOT but the two are almost par now due to a large-scale switch to feed wheat, a Singapore-based executive with a global commodities trading company said.


Ample supply of feed wheat from Australia and the Black Sea region will keep a check on corn prices, he said.

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