February 20, 2006

 

Asia Corn Outlook: Premiums to inch up on freight

 

 

Premiums of corn and wheat delivered to Asia are likely to inch up slightly in the week ahead, in line with rising freight rates, but higher U.S. corn futures will likely cap the rise, trade participants said Monday.

 

Dry-bulk ocean freight rates have been moving steadily higher, but the rise is unlikely to be sustained as more vessels become available, said a Tokyo-based trader.

 

A panamax-size cargo was offered at $36 a metric tonne Friday on the benchmark route from the U.S. Gulf to Japan, up from $33.50/tonne earlier last week.

 

Japanese buyers are currently mostly negotiating April-June shipment with their suppliers.

 

Putting a lid on the rise in premiums this week is the firm close of U.S. corn futures on the Chicago Board of Trade Friday, underpinned by speculative buying as well as friendly new-crop supply and demand projections from the U.S. Department of Agriculture's outlook forum.

 

CBOT March corn finished 3 cents higher at $2.26 1/2, and May ended 3 cents higher at $2.37 1/4 per bushel. For the week, March corn ended up 5 1/4 cents, and May corn gained 5 1/2 cents over the course of the week.

 

Traders said Asian grain importers took advantage of lower U.S. futures and were quite active last week, but may buy hand-to-mouth this week as they wait for the next move on the futures market.

 

U.S. corn was offered Monday at 144 U.S. cents/bu over the CBOT May contract, after cost-and-freight to Japan for March shipment, up from 140 U.S. cents/bu last week.

 

Thursday, Taiwan's Great Wall Enterprise Co. bought one cargo of U.S. No. 2 yellow corn, 10,955 tonnes of which were purchased at $137.71/tonne and 49,045 tonnes at 119.80 U.S. cents/bu over the Chicago Board of Trade's May contract, traders said.

 

This week, Taiwan Sugar Corp. will seek two combined cargoes totaling 53,000 tonnes of U.S. No. 2 yellow corn and U.S. No. 2 yellow soybeans in a tender Wednesday, said a Taipei-based trader. The cargoes are scheduled to be shipped between March and April.

In the wheat market, South Korean wheat millers held two separate tenders last week, purchasing a total of 42,300 tonnes of U.S. No. 1 wheat, traders said.

 

Buying may be slower this week due to higher CBOT prices, said a Seoul-based trader.

 

Meanwhile, Japan's Ministry of Agriculture, Forestry and Fisheries is expected to announce details Tuesday of a planned milling wheat tender to be held Thursday.