December 10, 2011
Ample supply expected to weigh on Asian grain prices
Asian grains prices are likely to decrease next week due to ample supply in the cash market, which is also inducing long liquidation in futures, according to trade participants.
Most active wheat, corn and soy futures on the Chicago Board of Trade may fall by up to another 15 cents/bushel, they said.
Wheat and corn futures for March delivery on CBOT are trading around US$5.95 and US$6.07 a bushel. January soy is around $11.31/bushel.
Traders and analysts are also awaiting a monthly demand and supply report of the USDA.
The general perception is that the report may revise upwards the US corn carryover stocks forecast for the end of the current marketing year on August 31, due to weak demand, said a Singapore-based executive with a global commodities trading company.
He said the recent corn purchases by Asian importers from other regions such as Europe and South America have dragged down demand from the US, the world's biggest exporter.
Taiwan's Maize Industry Procurement Association Thursday purchased 60,000 tonnes of Brazilian corn, on a cost and freight basis, from Glencore International PLC (0805.HK) at a 151 cents-a-bushel premium over CBOT March contract.
Japan, the biggest buyer of US corn, has purchased around 700,000 tonnes of European feed-grade corn in recent weeks, for January-March shipment or more than 20% of its quarterly needs.
The US share in the East Asian corn market is shrinking and is dragging down prices.
In wheat, heavy rains in New South Wales and Victoria have damaged part of the crop but the overall global and Australian supply is ample, which is weighing on prices.
"The USDA may revise up the global aggregate stocks and output numbers for wheat due to bigger crops in Australia and Russia," Okato Shoji Co. Deputy General Manager Koname Gokon said.
He said CBOT March wheat futures may fall to US$5.80/bushel sometime later this month.
Soy prices may fall in anticipation of a bigger crop harvest in Argentina in the first quarter but the January contract on CBOT is unlikely to fall below US$11.0/bushel because there are weather concerns, said a trader in Taipei.
In soy, the losses may be limited by talk of drought in Southern Brazil and possibly Argentina, Karl Setzer, an Iowa-based analyst with MaxYield Cooperative, said in a report.