February 13, 2012

 

 

Deals to buy some 200,000 tonnes of high-protein Australian milling wheat for April shipment are being negotiated by flour millers from Indonesia and Malaysia, while Vietnamese buyers are in market for March arrival corn.

 

Asian millers have stepped up purchases of wheat, corn and soy as prices rose over the last few weeks due to the harsh winter in Europe and drought in South America.

 

"Most millers in Asia are short on high-protein wheat, so they are looking at Australian cargoes," said a trading manager with an international trading company in Singapore. "They have been postponing purchases, expecting prices to fall."

 

Australian prime hard wheat with 11.5% protein was quoted at around US$325 a tonne, including cost and freight, into Southeast Asia, compared with US hard red winter wheat with similar protein scales being offered at US$335 a tonne.

 

Dark northern spring wheat from the US was quoted this week close to US$400 a tonne, C&F.

 

A global demand-supply report from the USDA on Thursday showed larger-than-expected supplies of corn and soy even as a severe drought curbed yields in Brazil and Argentina.

 

Chicago wheat slid almost 1% on Friday, falling for a fourth straight session and touching its lowest in almost two weeks, while soy and corn lost more ground. Wheat is down 3% so far this week, corn has shed 1.6% and soy have lost about 1%, all on course to snap a three-week rising streak.

 

Japan's farm ministry bought 75,742 tonnes of milling wheat from the US and Canada, the volume it had sought, in a weekly tender.

 

In the feed grain market, Vietnam and Malaysia are seeking new-crop South American corn for April shipment. "They haven't signed any deals yet, but we expect them to contract some cargoes next week," said another Singapore trader.

 

"South American values are pretty much unchanged in the last couple of weeks."

 

Argentine corn was being offered in Southeast Asia between US$315-320 a tonne, C&F, little changed from last week but higher than around US$290-300 quoted in the beginning of January.

 

Traders said Malaysia is looking to buy some 120,000 tonnes of corn for April arrival while Vietnam would be taking some 50,000 tonnes for March and April. South Korea's Major Feedmill Group (MFG) bought four 55,000-tonne cargoes of any-origin feed wheat for May and June arrival, US traders said.

 

The purchase included two cargoes for May arrival at US$301 and US$297.65 per tonne, including cost and freight, and two cargoes for June at US$296.75 and US$298.50 per tonne, C&F. Indonesia's corn imports are likely to slow down with the local harvest gaining pace in February and March, traders said.

 

"They will step up imports April onwards when they are done with the domestic harvest," the Singapore trader said. "Indian corn might be more competitive in Indonesia." Indian corn is quoted around US$295 a tonne, C&F.

 

The market is closely tracking the progress of corn and soy crops in Argentina and Brazil for a price direction. For a second month in a row, USDA lowered its forecast of Argentina's corn and soy crops. The corn crop was forecast at 22 million tonnes, down four million tonnes from the January estimate. Soy was forecast at 48 million tonnes, down 2.5 million tonnes in a month.