February 28, 2011

 

Asian grain buyers snap up corn, soy on price drop

 

 

Asian grain buyers are fast purchasing cargoes of wheat, corn and soy to take advantage of a recent global price reduction.

 

"The small window of opportunity that has been opened up by the latest downward price correction has made the physical market quite vibrant," a grains importer in Japan said.

 

Flour millers in South Korea, compound feed manufacturers in Japan and oilseed crushers in China are all snapping up grain cargoes.

 

Strong fundamentals persist and even though plantings of various crops in the US are set to increase in the spring, it will take some time for inventories to be replenished, an analyst with a commodities brokerage in Singapore said.

 

He said that grain markets are taking a breather after hitting a 30-month high, and that this is crucial for the importers.

 

Nearby-month corn futures on the CBOT have fallen below the psychological mark of US$7 a bushel, while wheat futures have fallen below US$7.50/bushel.

 

Physical offers of wheat, corn and soy are being adjusted lower in line with the decline in grains futures, and are up to US$35/tonne cheaper than last week.

 

China purchased more than 400,000 tonnes of South American soy last week for shipment between March, April and May, trading executives said.

 

They said that China purchased at least six cargoes from Brazil for March-May shipment, and one cargo from Argentina for May shipment.

 

China is the world's largest importer of soy, and the latest decline in prices could further increase its purchases.

 

Argentinean soy were offered around US$550/tonne, free on board, last week and Brazilian cargoes were quoted at US$545/tonne.

 

After the decline in CBOT soy futures, Argentinean soy are now being offered around US$513/tonne for May shipment and US$515/tonne for June, down more than 6% since last week.

 

Buyers in China are also covering soy needs for the June-August period.

 

Japanese compound feed manufacturers have purchased around 300,000 tonnes corn in the last 10 days and have also brought forward pricing of cargoes purchased earlier.

 

Japan has been aggressive in making purchases recently, and has now covered 70% of April-June requirements, a Tokyo-based trading executive said.

 

Traders said the recent purchases were made around US$1.95 above the CBOT May corn futures contract.

 

Buyers are also locking in the final price of previous purchases, they said. Average pricing for April shipment was done at US$6.83/bushel - after factoring in freight of around US$1.95 a bushel, the actual cost of import will be close to US$346/tonne, they said.

 

Pricing for May is around US$7/bushel, equivalent to about US$352/tonne, cost and freight, they said.

 

Japan, the world's largest corn importer, makes purchases by fixing a premium over CBOT corn futures, but sets final pricing by locking in the futures price of one particular day, to which the premium is added.

 

Flour millers in South Korea purchased a combined 30,000 tonnes of US soft, hard and spring wheat this week for shipment in May from Columbia Grain International.

 

The Korea Corn Processing Industry Association (Kocopia), Thursday (Feb 24) bought a cargo of 55,000 tonnes of corn from Cargill Inc. at US$349.23/tonne, cost and freight.

 

The lowest offers in tenders by Bangladesh Thursday to import 50,000 tonnes of wheat and 30,000 tonnes of parboiled rice were US$359/tonne and US$542/tonne, cost and freight. The government has until March 3 to decide on the offers.