January 30, 2012

South Korea's Nofi buys 110,000 tonnes of feed wheat

South Korea's largest feed miller, Nonghyup Feed Inc. purchased two cargoes totalling 110,000 tonnes of US corn on cost and freight basis for arrival in May 2012 despite concerns over rising prices on Friday (Jan 27).

One cargo of 55,000 tonnes was purchased from STX Corp. at US$1.7689 a bushel premium over the May futures contract on the Chicago Board of Trade, they said. Another cargo of the same quantity was purchased from CHS Inc. (CHSCP) at US$322.75/tonne, cost and freight. There is an additional charge of US$1.50/tonne for unloading part of the cargo at a second port.

Import costs on a flat price basis are up to US$17/tonne higher than a week ago and Nofi passed on the option to purchase two more cargoes in the tender, citing high prices.

South Korea has bought around 555,000 tonnes of feed wheat since January 6.

Prices are up to 4.5% higher than last week's purchases, when South Korean feed millers bought feed wheat between US$269.75/tonne and US$273.50/tonne, cost and freight.

Although ample feed wheat is available in Australia and the Black Sea region, prices are rising in tandem with corn and soybeans due to concerns that persistent dry weather in Brazil, Argentina and Paraguay will hurt production.

Last week, Nofi bought a cargo of US corn at US$1.96/bushel premium over CBOT May futures but the contract has since then rallied and is now above US$6.40/bushel. Other South Korean buyers had made purchases of US origin corn at US$305.90/tonne and $307.99/tonne, cost & freight.

South Korea, one of the world's largest importers of feed grains, has purchased at least 1.233 million tonnes, including 458,000 tonnes of corn since January 6, taking advantage of the recent slump in prices and concern that they have started to rally again due to the dry weather in South America.