India wheat acreage increases 7%

NEWS DIGEST

Farmers in India, the world's second- biggest wheat producer, planted the crop on 7 per cent more land from a year earlier, the farm ministry said.

Wheat was planted on 26.4 million hectares (65.2 million acres) as of December 29, compared with 24.7 million hectares a year earlier, the ministry said in a statement today.

Wheat, India's biggest winter food grain, is planted from October through December. Harvesting begins in March and continues through April.

The area under winter oilseeds such as mustard dropped 8.1 per cent to 9.1 million hectares as of Dec. 29 from 9.9 million hectares, the ministry said.

The winter crop accounts for almost 40 per cent of the country's total oilseed production. India, the world's second-biggest vegetable oil importer, buys palm oil from Malaysia, Indonesia and soybean oil from Brazil and Argentina.

Farmers sowed corn in 0.99 million hectares of December 29, 45 percent more from a year earlier, the ministry said.

London coffee futures may decline

London coffee futures may ease on producer sales at the start of the new year, traders said on Tuesday. New York markets are closed on Tuesday to mark the death of former President Gerald Ford.

London robusta coffee futures risked falling under the weight of Vietnamese producer selling, traders said.

"Heavy origin selling from (top robusta producer) Vietnam (is) continuing," Redtower Research said in a daily research note, noting support in March at $1,571 a tonne and resistance at $1,609.

Vietnam coffee prices stay steady

Coffee prices in Vietnam, the world's second largest producer after Brazil, held steady in the past week, supported by fresh supply from the coffee harvest and robust export demand, traders said on Tuesday.

"Trade has been very hectic and business has been very smooth with strong demand from foreign buyers and sufficient volumes of beans available," said a trader in Buon Ma Thuot, the capital of coffee-growing belt province of Daklak.

A kilogram of robusta was offered at around 21,600 dong to 21,800 dong ($1.34-$1.35), similar to price levels in the past three weeks, traders said.

Vietnamese robusta grade 2, 5 per cent black and broken were also stable at around $1,475 on Tuesday, on free-on-board basis, unchanged compared to last week.

Vietnam's latest coffee output is expected to rise 32 per cent from the previous season to 15.83 million bags, with two-thirds of a bumper harvest now completed. One bag contains 60 kg of coffee beans.

NY cotton prices fall as US exports dip

Cotton in New York fell the most in six weeks on signs of weak overseas demand for US supplies. US exporters sold 116,700 bales of cotton for the week ended December 21, down 64 per cent from the previous week, the Agriculture Department has said on Friday in a report. Advance orders in the market year that began August 1 totalled 5.7 million bales, down 42 per cent from the year-earlier period.

``The poor weekly export sales report was the major contributor to the setback in cotton today,'' said Bill Nelson, vice president for A.G. Edwards & Sons Inc. in St. Louis, in an e-mail.

Cotton for March delivery fell 0.77 cent, or 1.4 per cent, to 56.19 cents a pound on the New York Board of Trade, the lowest closing price for the most-active contract in a week and the biggest decline since November 13.

Corn may top 10-year high,soybeans to gain

Corn futures in Chicago may rise above a 10-year high and soybeans may extend a rally as demand increases for alternative fuels made from crops.

Twenty of 26 traders, farm advisers and grain merchants surveyed December 29 by Bloomberg said to buy both commodities. Corn advanced 1.6 per cent last week, the third straight gain, and jumped a record 81 per cent in 2006. Soybeans climbed 3.4 per cent, ending the year up almost 14 per cent.

Rising demand for alternative fuels is eroding supplies of crops normally used for animal feed or food processing.

US production capacity for corn-based ethanol, already at a record, may double in the next two years, and the government said last month demand for biodiesel made from soybean oil may rise 17 per cent in 2007. The US is the largest producer and exporter of both crops.

``The fundamental story of the increasing number of ethanol plants will carry corn prices higher,'' said Jerry Gidel, a market analyst for North American Risk Management Services Inc.in Chicago.

Corn futures for March delivery climbed 6.25 cents last week to $3.9025 a bushel on the Chicago Board of Trade, the ninth gain in the past 10 weeks.

Prices reached a 10-year high of $3.935 in November after a Midwest drought reduced US production and demand for grain to make ethanol rose to a record. Corn's 57 per cent advance from September through December was the biggest for any four-month period since at least 1973.

The March soybean contract rose 23 cents to $6.9725 a bushel last week, the third consecutive weekly gain. Prices reached a 17-month high on December 29 and have jumped 28 per cent in the past three months, the most over a three-month period since October 2003.

Most respondents surveyed December 22 correctly predicted corn and soybeans would rise last week. The corn survey has been accurate 55 per cent of the time since it began April 26, 2004.

The soybean survey, which started six weeks later, has been correct 54 per cent of the time. US demand for corn used to make ethanol, a gasoline additive, will rise 34 per cent to a record 2.15 billion bushels in the marketing year that began September 1, the US Department of Agriculture said December 11.