March 12, 2012

 

Asia grain demand up due to potential price rise

 

 

Demand for Asian grains are expected to increase this month as importers secure purchases as the effects of dry weather in South America are presumed to raise prices.

 

The USDA may lower its forecasts for inventories of corn and soy because of drought in several parts of Brazil, Argentina and Paraguay.

 

South Korean feedmillers are scrambling to buy feed grains and have locked in deals to import at least 330,000 tonnes of corn and wheat over the course of the last two-to-three days in anticipation of further price gains.

 

"The price outlook is bullish and importers don't want to be caught on the wrong side of the fence," said an importer in Seoul.

 

South Koreans are also buying soymeal, rapeseed meal and palm kernel meal as well as negotiating more deals for corn in the run-up to the USDA report, the importer said.

 

Corn importers in Japan are finalising the prices of earlier purchases of several hundred thousand tonnes and making deals for fresh imports, said an executive with a Tokyo-based commodity brokerage.

 

Japanese compound feed manufacturers purchase corn on a premium basis to futures contracts on the Chicago Board of Trade, and they lock in the final price on a date of their choosing.

 

Australian wheat prices are firm but trading at a discount to Chicago Board of Trade futures, traders said.

 

There is a lot of demand but also plenty of wheat supply in Australia, said Stefan Meyer, Sydney-based cash markets manager with FCStone Australia Pty. Ltd.

 

Australian Standard White and Australian Premium White wheat is currently offered around US$270/tonne and US$280/tonne, free on board for bulk shipment from the East Coast in May, he said. West Coast offers are at a US$5/tonne premium.

 

Since shipping slots in Australian ports are mostly booked for several months and wheat is competitive at various destinations, exporters aren't offering the grain at lower prices, despite excess supply, a Melbourne trading executive said.

 

Traders expect Australian feed wheat to be supplied in the latest South Korean deals, in which Glencore sold two cargoes totalling 110,000 tonnes to Major Feedmill Group at US$285.90/tonne, cost and freight.

 

South Korea's corn deals will likely to be filled European-origin grain, which is priced around US$12/tonne lower than US rivals on a C&F basis, around US$312/tonne.