Monday, April 11, 2011
Asia Grain Outlook: Corn Hits Record High; Demand May Ease
SINGAPORE (Dow Jones) - Demand for Asia 's for corn is likely to ease as prices rise to record a new high, as buyers step up purchases of feed wheat on the other hand, trading executives said Monday .
The most active May corn futures contracts on the Chicago Board of Trade reached a record high of $ 7.8375 a bushel in electronic trading on Monday.
physical buyers in Asia are offering U.S. No. 2 corn on a given around $ 385 - $ 400 per metric ton, one of the highest in history.
At current prices, some thinning of the demand is bound to happen, "said a Singapore-based executive with a global trading company.
U.S. offerscash necessary to remain competitive with feed wheat from Australia or risk eliminate the demand, said Karl Setzer, a US-based analyst with MaxYield Cooperative.
Last week, in physical trade, imported feed wheat in the delivery stage of Southeast Asia was up $ 80/ton cheaper than U.S. corn.
U.S. Department of Agriculture unchanged its forecast for ending stocks of corn in the country, and this may have affected the demand for animal consumption amid soaring prices, said an analyst based in Tokyo.
The USDA increased the estimate for corn ethanol use by 50 million bushels, but lowered the use of feed in an equal amount, leaving projections for closing stocks unchanged, Setzer said.
The general perception is that the USDA in its monthly report Friday, revise downward its forecast for the country's maize stocks closing at the end of the campaign on 31 August.
U.S. is the largest exporter of corn with more than 50% of world trade.
In its monthly report in March, the USDA kept the country's reserves of corn closing unchanged at the forecast of a 15-year low of 17.14 million tonnes in April and remained well.
The high corn prices, will raise the demand for wheat as a substitute for animal feed in many Asian countries, said Nobuyuki Chino, president of trading company based in Tokyo continental products.
The USDA reduced its estimate for the closure of the wheat stocks among major exporters than the U.S. 6% to 27.22 million tonnes. The major exporters are Argentina, Australia, Canada and the European Union.
Part of this change is already taking place, to feed wheat from Australia to the U.S. from corn, and is likely to accelerate in the coming weeks.
wheat raw corn on the Chicago Board of Trade fell Friday to their lowest level in more than a decade at just 10 cents per bushel compared to 100 cents per bushel last month and 177 cents dollar in mid-December. Currently about 25 cents per bushel.
Buyers in Vietnam, the Philippines and Indonesia have already taken several hundred thousand tons of feed wheat from Australia as a replacement for maize in animal feed.
wheat exports from Australia in February rose 3.4% in January to 1.81 million tonnes, 47% more than in February, the country's statistics office said Thursday.
For the first time, corn prices could hit a record $ 8.50-$ 9.0 per bushel in the coming months, said Chino.
feed wheat in Australia is at least 20% cheaper than U.S. corn.
It is rare for feed wheat to sell at a steep discount to corn. In early August last year, when Russia banned the export of grain, feed wheat was trading at $ 30 - $ 35/ton premium to corn on a delivered basis.
(Source: http://online.wsj.com/article/BT-CO-20110411-705176.html)
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