March 18, 2011

 

Asia's buyers on sidelines as grain prices decrease

 

 

Asia flour millers were on the sidelines this week as world wheat, corn and soy prices slid amid demand concerns after the Japanese earthquake.

 

US and Australia wheat cash prices fell, tracking decline in the Chicago grain futures which suffered losses amid a broad-based selloff in the financial markets as investors shunned risky assets.

 

Australia prime wheat was being offered at US$330 a tonne, free on board, and Australian standard wheat was quoted below US$300 a tonne - a decline of around US$40-50 a tonne from last week, traders said.

 

Similarly, US standard white wheat, dark northern spring wheat and hard red winter wheat also lost around US$50 a tonne this week.

 

"Nothing much has traded as buyers are waiting and watching the global markets fall," said one trader with an international trading company in Singapore. "It will take a while for importers to come back in the market because everyone will wait for stability to return."

 

CBOT May wheat has dropped around 6% since the Friday's (Mar 11) earthquake which took the market's losses to 18% in March driven by social unrest in the Middle East earlier and Japan's nuclear crisis now.

 

Corn lost more than 7% in the last two sessions on signs that grain cargoes were stranded off Japan, casting a long shadow over demand from the world's top corn importing nation.

 

Thailand was in the market seeking 100,000 tonnes of US wheat for June and July shipment, traders said, adding that a deal could be signed next week if markets stabilise.

 

Most Asian buyers, including Indonesia and Malaysia, are covered for wheat supplies until May. "They will be placing orders for June and beyond but they will wait for prices to bottom out," said another Singapore trader.

 

The Japanese government bought 28,135 tonnes of feed wheat and 163,435 tonnes of feed barley in a tender on Wednesday (Mar 16), less than the volumes sought of 30,000 tonnes of feed wheat and 200,000 tonnes of feed barley.

 

In the feed grain market, South Korea millers were actively buying cargoes.

 

South Korea's biggest feed maker Nonghyup Feed has bought a maximum of 55,000 tonnes of soymeal for July arrival from Glencore via a tender closed on Wednesday.

 

In addition, Korea Feed Association has bought 110,000 tonnes of yellow corn and 110,000 tonnes of soymeal via tenders this week.

 

Traders said most soymeal importers in Southeast Asia were covered until July and there were not many cargoes traded this week.

 

New-crop soymeal from Argentina is quoted around US$435 a tonne, including cost and freight, for July shipment, while Indian meal is priced at US$430 a tonne, traders said.

 

Market is expecting Thailand to buy 100,000 tonnes of US wheat next week. There could be buying interest from other importers in the region if prices stabilise. Vietnam is also expected to sign deals to take South American corn after disruption of supplies from India.