SINGAPORE (Dow Jones)--Grains prices may turn weaker following last week's
generally bearish U.S. Department of Agriculture supply and demand report,
though wheat futures bucked the trend to trade higher in electronic trading
Monday in Asia on the Chicago Board of Trade.

  The USDA in its July supply and demand report shaved 2009-10 world wheat
production to 181.3 million tons from its June estimate of 182.7 million.

  The tone of the report remained slightly bearish, as stocks are still at
their highest levels since 2001-02, but this was largely expected and has
already been factored into prices, observers said.

  At 0700 GMT, e-CBOT's July wheat contract was trading up 7.50 U.S. cents at
$4.9925 a bushel, while rice, soybeans and corn turned mostly lower in thin
volumes.

  In Australia, widespread rainfall in June has boosted the outlook for wheat
production this crop year, Rabobank Australia said in a report Monday, as it
held unchanged from last month its output forecast of 22.8 million metric tons.

  However, it warned of two key emerging risks to the crop, namely an increased
chance of an El Nino weather episode and potential yield impacts from reduced
use by farmers of fertilizer and crop chemicals, with producers being more risk
averse in spending terms in the current economic climate.

  "Currently the major focus for the Australian climate outlook is the
potential for an El Nino event later in the year. The Bureau of Meteorology
states that all international climate models predict the tropical Pacific Ocean
will further warm and be above El Nino thresholds throughout most of the second
half of 2009," Rabobank said.

  The development of an El Nino weather episode is usually but not always
associated with below-average rainfall in Australian wheat regions, which can
have an adverse effect on crop development.

  Wheat prices in China's major producing regions rose in the week to Monday,
with farmers in some producing areas still holding onto stocks in the hope of
better prices, while wheat futures on the National Commodities and Derivatives
Exchange of India also rose amid concerns that less rainfall could lead to
lower output of grains, market observers said.

  In other regional grains news, South Korea's Major Feedmill Group purchased
110,000 metric tons of corn in a tender concluded late Friday, a trader with
the company said Monday.

  The first cargo of 55,000 tons was purchased at $210.87/ton from Cargill and
will arrive Jan. 15. The second 55,000 ton cargo of optional origin will arrive
Jan. 25 and was purchased at $207.97/ton, the trader said.

  Meanwhile, India's federal government is not planning to lift a ban on
exports of non-basmati rice anytime soon, junior trade and industry minister
Jyotiraditya Scindia told the lower house of Parliament Monday.

  Last week, federal agriculture minister Sharad Pawar told reporters the
government will review the export ban in August after assessing rains and the
crop's condition.

  India banned rice exports in 2008 to try to rein in inflation and safeguard
domestic supply.