SE Asian countries sit out weather market

SE Asian countries sit out weather market

SINGAPORE (Reuter): Southeast Asian countries will stay out of the grain market this week as most are well-covered and do not want to get hit by the gyrations in prices of a weather-driven market in the United States, grain traders said yesterday.

The only exceptions would be Thailand, which is trying to clinch a deal for about 33,000 tons of soybeans, and the Philippines, where flour companies are looking to buy about 31,000 tons of U.S. wheat this month, the Singapore-based traders said.

"It's a typical July market. There's nothing sexy going on," a trader in a western commodity house told Reuters in an interview.

"The buyers are pretty well-covered out here," a trader in a European commodity house added. "It's real quiet."

Traders said Indonesia, Malaysia and Thailand have abundant supplies of imported wheat and corn. Combined with the harvest in Thai and Indonesian farms, stocks of grain will not be depleted soon and they will not be in the market.

Indonesia last week concluded a purchase of 30,000 tons of soybeans for September/October shipment. The price was not immediately available.

"The Thais are closing in on a deal for around 33,000 tons of soybean, but they're dithering on the price," a local trader said. "The Thais obviously want something lower." The shipment is for October delivery.

July soybeans in the Chicago Board of Trade (CBOT) closed 9.75 U.S. cents down at US$7.735 a bushel.

Otherwise, one trader said the grain market in the region is "relatively dry."

"Demand is taking a backseat. Everybody's focused on the weather," another dealer said.

Regional buyers are focused on weather conditions in the United States, China and India, traders said.

China has recently received ample rain over its corn and wheat growing areas which may reduce the likelihood of further imports by Beijing.

But some dealers are concerned whether the Indian soybean crop will be hit if the annual southwest monsoon fails to dump enough rain in the country's western and northern regions.

"India is like this every year. Everybody is looking for a disaster, but its not happening so far," one analyst said.

The main focus of attention, however, will be on weather conditions over the U.S. corn belt and concerns that a return of hot and dry weather may damage the crop, driving prices up.

A high pressure ridge hovering over extreme western portions of the corn belt is expected to remain to the west, sparing the crop from the withering heat. The good weather has weighed on prices in Chicago.

"If the weather holds and the corn pollinates, prices will head down. But if we get hot and dry weather, prices will head for the moon," one trader predicted.

"Hot weather over U.S. corn may trigger buying as countries scramble to grab the corn," another trader said.

Uncertainty over the weather which caused prices in the U.S. to jump up and down prompted buyers from Southeast Asia to sit on the sidelines. Traders said the market in Asia will wait for the weather market to run itself out and adopt a buy-on-dips tactic.