Asia Grain Outlook: Prices May Rise On China Corn Demand

SINGAPORE (Dow Jones) - Prices of Asia 's grain is likely to extend gains on technical buying as concerns about weak demand in Japan and ebb amid speculation that China's demand for corn.
Traders said China could have bought several cargoes of U.S. corn last week a total of over 600,000 metric tons, when prices fell sharply, but the offers could not be confirmed immediately.
"At least one major Chinese buyer is said to have been very active last week (maize) purchases for shipment in July and October," said a person familiar with events.
Last Thursday, the U.S. Department of Agriculture reported that private exporters reached agreements to sell 116 000 tonnes of maize for delivery to unknown destinations during the 2010-11 season. Traders said sales may have been to buyers in China.
The person said actual sales to China could be much higher, but most of the grain will be shipped next season, which begins on 1 September.
If sales are made in a free country, based on board, U.S. exporters are not required to disclose the destination until the vessel has been designated for shipment.
Even in the absence of demand from China, the U.S. corn inventories is expected to hit a 15-year low in late August.
Any imports from China may deplete more and more stocks to counter any slowdown in purchases by Japan, said an industry analyst based in Washington.
Japan is the largest importer of corn, while the U.S. is the largest exporter. China imported 1.6 million tons of corn last year, its largest acquisition in several years, but imports can potentially increase manifold in future as demand increases for beef and pork. Corn is used primarily as animal feed.
The merchants say that rising corn prices may push up wheat prices as well. wheat raw corn on the Chicago Board of Trade fell to its lowest level in a decade last week to less than 32 cents.
Earlier this year, China bought at least 500,000 tonnes of wheat from Australia, around 125,000 tonnes of food quality wheat.
Traders expect more active maize, wheat and soybean futures contracts at CBOT May to test 7.0 dollars per bushel, $ 7.50 and $ 13.80 respectively this week. The contracts are currently trading around $ 6.89, $ 7.23 and $ 13. 66.
However, rising grain prices can slow physical buying in Asia this week.
The downward correction in the past prompted a wave of heavy buying in the North and Southeast Asia to South Korea to Indonesia and Vietnam to the Philippines.
Buyers in the locked region in providing more than 1.1 million tons of grain and oilseed meal last week.
South Korean food and flour millers only buy at least 705 000 tonnes of grains and meals, making the country one of the world's largest buyers of grain last week.
Australia sold 200,000 tons of wheat in the week to Friday, including a charge that the earthquake hit Japan.

(Source: http://online.wsj.com/article/BT-CO-20110321-704417.html)