March 28, 2007

 

Asia Grain Outlook on Wednesday: Corn demand stable despite high prices

 

 

Demand for corn in Asia remains quite stable despite high international prices, as traders slowly accept the fact that grain prices aren't going to fall in a hurry.

 

South Korea's Korea Corn Processing Association, which canceled a buy tender for food corn last week due to high prices, bought 55,000 metric tonnes of optional-origin corn this week.

 

The corn will be supplied at US$233.85/tonne for U.S. or South American corn or US$223.85/tonne for Chinese corn.

 

Of course, the option for Chinese corn remains a bit of wishful thinking, since China's government hasn't issued any fresh corn export quotas.

 

Media reports have quoted food industry officials in China as saying that corn exports may drop to as low as 1 million to 2 million tonnes this year from 3 million tonnes last year.

 

Corn imports by Asia's largest corn buyer, Japan, are currently proceeding at a sluggish pace, as most feedmillers have fulfilled their corn needs up to June.

 

"I think maybe early next month, feedmillers will begin importing corn for the July-September quarter," said a trader at a Japanese commodity broking firm.

 

He said that while high input costs for feed and low prices of eggs (due to sluggish demand) are putting pressure on poultry farmers in Japan, there's not much concern over the fall in Japanese corn imports.

 

"Japanese feedmillers will likely import 12 million tonnes of corn this year, just as they did last year," added the trader.

 

Traders said Japanese feedmillers were uncomfortable with using any substitute for corn in their feed products.

 

Asian buyers also continue to dither with other grains, floating tenders and canceling them or buying less than what they intended to.

 

Taiwan's Breakfast Soybean Procurement Association Tuesday canceled a tender to buy an unspecified amount of soybeans.

 

"The bids were just too expensive for us," said an official at the association.

 

Prices of grains in Asia are likely to remain little changed for the rest of the week, as grains futures on the Chicago Board of Trade may trade range-bound until Friday, when an eagerly awaited U.S. Department of Agriculture report indicating likely sowing intentions of U.S. farmers in the summer comes out.