February 23, 2009

South Korean feedmillers are likely to ease corn imports this week, after contracting enough supplies recently to last them till early June.

"South Korean buyers booked 10 cargoes in the second week of February, so most feed companies are well-stocked at present," said a feed-buying manager in Seoul.

Traders added that feedmillers were well-stocked, and they would begin stocking up for June onwards when they start making purchases again.

Traders also said that South Korean companies have covered their feed wheat purchase up to July, adding that purchases of the commodity will be much lower next two to three months as the corn-wheat price differential narrows.

Feed wheat was almost US$50/tonne cheaper than corn at the beginning of the year, and is now only US$10/tonne cheaper as feed wheat prices have risen due to a global increase in demand, they said.

In other grains, rice prices are likely to stabilize over next two to three months, in the absence of any significant push or pull factors in demand or supply.

"I think rice prices may hover in a tight range around the current level, as there are only two major rice exporters in the world now - Thailand and Vietnam - with both of them seeing rundown on exportable surplus," said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.

Traders in Vietnam too agree that prices may stabilize at around US$450/tonne, the state-set minimum price, in the short term, while Thai prices may hover around the US$590-US$610/tonne band.

Meantime, the government-run Vietnam Food Association, or VFA, has instructed all companies to halt signing contracts to export rice in the first half of this year, to prevent a surge in local prices, an association official said Monday.

Vietnam had earlier set an export target of 2.8 million tonnes for the first half, but the association's Chairman Truong Thanh Phong last week said the country could export up to 3.5 million tonnes of rice in the January-June period because of ample local stocks.