SINGAPORE (Dow Jones)--Cash grains prices are likely to stay firm in Asia in
coming days, with the market likely to continue focusing on a lack of rain in
the region, which is still fueling concerns that crop output could be lower in
the weeks and months ahead, traders said Friday.

  In China, around 8 million hectares of cropland are suffering from drought,
which though down 37% from earlier peak levels, is still slightly higher than
average, the government's flood and drought relief office said earlier this
week.

  China's soybean prices are likely to remain supported because the government
is unlikely to cut soybean sales prices during its weekly auctions ahead of new
arrivals in around two weeks of soybeans from the harvest, as it aims to
protect farmers' profits, said Xu Zhimou, an analyst with Ruida Futures
Brokerage Co.

  In Australia, July wheat exports were 37% lower than June's, and took the
total for the marketing year that started Oct. 1 last year to 12.35 million
tons, the government's Bureau of Statistics said.

  Patchy rain in some parts of Eastern Australia fell short of expectations,
adding to existing worries about wheat production. Analysts' estimates earlier
this week had pegged this year's crop at 21 million tons, but some are now
estimating the wheat crop to be as low as 18 million tons, compared with an
actual 21.4 million tons last year.

  In India, a slight improvement in rains since last week may help soothe
weather-related crop concerns slightly, though the monsoon rains were still 23%
below the 50-year average in the June 1-Sept. 2 period.

  India is heavily dependent on its annual monsoon for summer-sown crops as 60%
of its farmlands are rainfed.

  Chicago Board of Trade futures were mostly lower in lackluster volumes in
Asian trading Friday, while talk that India's government may release wheat
stocks to help keep prices in check damped buying interest in futures on the
National Commodities and Derivatives Exchange, traders said.

  "Talks that the government is likely to release 1 million tons (of wheat) in
the local market next week is sidelining buyers. Any further delay in releasing
the stocks may keep prices firm in the short-term as local supplies with
private traders are dwindling fast," said a Delhi-based trader.

  In other news, Japan's Ministry of Agriculture said it purchased 127,000 tons
of U.S., Australian and Canadian wheat in a regular weekly tender concluded
late Thursday, while the Korea Feed Association said it purchased 55,000 tons
of corn from Marubeni for March arrival.

  The corn was purchased at $197.50/ton if it is of U.S. origin and $194.70/ton
if it is of South American origin, both on a cost-and-freight basis, a KFA
official said.

  Meanwhile, despite soybean inventories in the U.S. and South America
shrinking to near record lows, the market could be heading for a supply glut of
millions of tons, if forecasts of a record U.S. harvest and an increase in
planting in South America prove correct, a senior agricultural commodities
consultant said Thursday.

  "Farmers (in the U.S.) who are selling soybeans now at $10.00-$11.00/bushel,
by April could be glad to be getting $8.00/bushel. They could even be getting
less," said John Baize, president of John C. Baize and Associates.

  However, continued growth in China's consumption likely means soybean demand
will remain healthy in the longer term, he said.

  Baize said the development of an El Nino weather pattern in Asia could also
be a supportive factor for soybean oil, if dry weather results in lower palm
oil production in Malaysia and Indonesia in the months ahead.