* WHAT: Grains conference in Phuket
* WHEN: Aug 29-30
* U.S. drought, Black Sea supplies in focus
* El Nino may hurt crops in India, Australia
By Naveen Thukral
PHUKET, Thailand, Aug 28 The fallout from a
scorching drought across the U.S. grain belt and poor rains in
the Black Sea bread basket will dominate a grains conference in
Thailand this week, as global prices hover near record highs and
threaten to reignite a food supply crisis.
Below-average rains in other key producers such as
Australia, the world's No.2 wheat exporter, and India, the top
edible oil importer, would also be in focus at the meeting
starting on Wednesday at the southern Thai island of Phuket.
Investors in agricultural markets are closely watching the
response from buyers, especially in Asia, which accounts for
around three quarters of the world's soybean imports and just
under half of corn purchases.
"What is key is how consumers deal with the impact of U.S.
drought on one hand and production volatility in other parts of
the world such as the Black Sea region, Australia and South
America," said Brett Cooper, a senior manager of markets at
"Buyers are going to see increased volatility both in terms
prices and supplies."
U.S. corn futures have climbed 55 percent since the
beginning of June, while soybeans have jumped nearly 40
percent as the worst drought in 56 years curbs yields in the
United States, the world's top exporter.
Wheat has surged about 35 percent with the Black Sea
drought and poor rains in Australia adding to supply woes.
The 9th Southeast Asia-U.S. Agricultural Cooperators
Conference -- organised by lobby groups the American Soybean
Association International Marketing, the U.S. Grains Council and
the U.S. Wheat Associates -- brings together U.S. exporters and
This summer's historic drought has inflicted more damage to
corn and soybean crops around the U.S. Midwest than the
government is predicting, the Pro Farmer newsletter said last
week after a tour of the grain belt.
It estimated U.S. corn production at 10.478 billion bushels,
based on a yield of 120.25 bushels per acre. That compares with
the U.S. Department of Agriculture's (USDA) latest forecast of a
10.779 billion bushel crop on a yield of 123.4 bushels per acre.
Soybean production was seen at 2.60 billion bushels on a
yield of 34.8 bushels per acre. Earlier this month, the USDA
pegged the soybean harvest at 2.692 billion bushels and yield at
36.1 bushels per acre.
ASIAN DEMAND IN FOCUS
A reduction in demand in Asia, home to the world's biggest
soybean importer China and top corn buyer Japan, could undermine
"Demand is still strong but the question is when it falls
off the cliff," said one Melbourne-based agricultural analyst.
"This really has still not fully fed into major importers as it
takes three to four months to have an impact on food inflation."
U.S. drought has also revived a fierce food versus fuel
Livestock and food producers are calling on President Barack
Obama to abandon -- at least temporarily -- a government mandate
that requires converting more than a third of the U.S. corn crop
Even though the USDA has reduced its forecast of corn use
for ethanol, analysts say rising oil prices mean ethanol is
still cheaper than gasoline in some places, encouraging refiners
to maximize its use in blending.
An El Nino weather pattern, which brings dry weather to most
parts of Asia, could also harm crops from Australia to India,
deepening concerns about food supplies.
Australia is already facing dry weather in several wheat
areas including, the top producing western part of the country.
Although Indian monsoon has revived in the last few weeks,
concerns remain for cereal and pulses output.
The International Grains Council last week cut global maize
production in 2012/13 by 26 million tonnes to 838 million
tonnes, well below the prior season's 875 million. Global wheat
production in 2012/13 was seen at 662 million tonnes, down 3
million from its previous estimate and well below the prior
season's 696 million.
(Editing by Ed Davies)