December 10, 2007

Asia Grain Outlook on Monday: Wheat may keep rising on Asian demand

Wheat prices are likely to keep rising in the week ahead, as demand remains strong, especially from India and Pakistan.

In the Chicago Board of Trade, wheat ended sharply higher Friday and resumed its gains in Monday's trading, buoyed by news that India's state-run State Trading Corporation is seeking to buy 350,000 tonnes of wheat in a tender.

At 0545 GMT, December wheat is up 12.4 cents at US%9.16/bushel.

Bidding for the STC tender will close on Dec. 17 and the results are likely to be announced seven to 10 days later.

However, despite the large amount of wheat being sought in the STC tender, India's federal government will fall short of its stated target of importing 1 million tonnes in three tenders that began November.

So far, state-run trading companies, MMTC Ltd and PEC Ltd. have bought a total of 492,000 tonnes of wheat in two separate tenders. If STC buys the entire tendered amount, the total purchase will be 842,000 tonnes.

However, PEC Ltd has said that even though it bought 150,000 tonnes of wheat in a tender concluded Friday, it originally sought to buy 350,000 tonnes in that tender and continues to negotiate with other bidders to source for more wheat.

Meanwhile, the outlook for wheat prices globally looks firm, as U.S. traders are concerned that more farmers may switch to growing soybean instead of wheat in the U.S. in 2008. India too has had a slack wheat sowing season so far this year, with indications that wheat output in 2008 may lag 2007's production, thus leading to higher imports.

In Pakistan, bidding for a tender to buy 200,000 tonnes of wheat closed on Dec. 8. No further details are available on when the government will award the tender.