(Updates with Ofon’s comments in third paragraph.)
Oct. 5 (Bloomberg) -- Grain importers such as China and Egypt may make purchases to boost inventories after corn and wheat prices fell last month, Standard Chartered Bank said.
Corn prices may rise on lower global inventories and soybeans may gain as Chinese demand remains “resilient,” analyst Abah Ofon wrote in a report today. Wheat futures may advance as livestock feeders substitute the grain for high- priced corn, he wrote. Prices for the two commodities declined 23 percent in September and soybean futures dropped 19 percent.
“We do not think the current sluggishness in grain prices will last, as we still expect corn supply, in particular, to remain tight,” Ofon said. “We expect corn prices to lead the pack higher once market volatility wanes and as inventories are drawn down in” the first half of 2012, he said.
Prices in September fell partly on fears that demand for raw materials would decline amid the European debt crisis and because the U.S. Department of Agriculture pegged corn and wheat stockpiles higher than expectations. Importing countries may take advantage of the prices and make purchases as they bet futures will gain, according to the report.
“The deep decline in grain markets plays into the hands of buyers,” Ofon said. China will “relish the recent collapse of grain prices, given it has been grappling with high domestic demand for corn.”
--Editors: John Deane, Sharon Lindores
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