February 13, 2012

South Korea's Major Feedmill Group buys high-priced wheat

South Korea's Major Feedmill Group on Thursday (Feb 8) purchased four cargoes of 220,000 tonnes of optional-origin feed wheat for late-May and early June arrival.

The prices, around $300 a tonne, are higher than South Korean firms have paid for feed wheat since last April, when buyers bought 275,000 tonnes in just two days at US$293.70-306.50/tonne, C&F, mostly from Canada and Europe, for shipment in the third quarter.

The South Korean feedmiller bought one cargo each from Glencore, STX Corp., Alfred C. Toepfer International and Noble Resources at US$301, US$296.75, US$297.65 and US$298.50 a tonne, respectively, on a cost-and-freight basis.

Separately, the Korea Feed Association purchased a cargo at US$299.50/tonne, C&F.

Due to logistical constraints in Australia and tight supply in Canada, traders expect most of the cargoes to be supplied from the US Pacific Northwest, where freight costs are lower.

An importer in Seoul said the prices imply the wheat cargoes are of US origin.

South Korea bought feed wheat on January 27 at US$282/tonne. A week earlier South Korean buyers were paying US$269.75-273.50/tonne, C&F.

Although feed wheat is available from Australia and the Black Sea region, getting shipping slots at ports can be difficult, and prices are rising in tandem with corn and soy on the back of concerns that persistent dry weather in Brazil, Argentina and Paraguay will hurt production and limit global supplies.

South Korea has purchased almost 1.7 million tonnes feed grains, including 830,000 tonnes of feed wheat, since January 6, mostly to cover its requirements for the second quarter.