April 3, 2006

 

Asia Corn Outlook: Demand may remain buoyant

  

 

Asian demand for corn and wheat may remain strong in the week ahead, as South Korean buyers are likely to continue importing U.S. corn while Japan is likely to resume its weekly wheat imports after a more than two-week break.

 

Meanwhile, Asian buyers are concerned about a rise in international corn prices, as CBOT corn futures ended higher most of last week, amid expectations of a lower 2006 U.S. corn harvest and strong demand for U.S. corn in the absence of Chinese corn exports.

 

"Corn futures are really rising fast, and that is making many exporters wait and watch before buying corn," said the manager of a feed buying house in Taipei.

 

He said Taiwanese buyers are unlikely to buy much corn in the current week, due to the high prices.

 

In South Korea, however, corn imports are expected to continue despite rising prices.

 

"Feed mills don't have a choice but buy corn. Feed wheat prices are anyway US$10/tonne higher than corn prices," said an analyst in Seoul.

 

Analysts said both Members Feedmill Group and Nonghyup Feed Inc. are expected to buy corn this week.

 

They added that feedwheat demand in South Korea is expected to remain slow, with not more than one panamax-sized cargo likely to be bought in April.

 

Among the major deals last week, Taiwan Sugar Corp., or TSC, bought 23,000 tonnes of U.S.-origin corn from trading house Mitsui in a tender.

 

Last week, the Korea Corn Processing Industry Association, or Kocopia, bought up to 110,000 tonnes of optional-origin food grade corn from trading house ADM.

 

However, Major Feedmill Group and Korea Feed Association canceled a joint tender for 55,000 tonnes of U.S. corn last week, as they found the bids too high.

 

In wheat, Japan's Ministry of Agriculture, Forestry and Fisheries is expected to resume its weekly wheat import tenders from Tuesday after its last tender was concluded March 16.

 

India, meanwhile, is considering importing between 1.5 million to 2 million tonnes of wheat and will make a decision on the matter shortly, Agriculture Minister Sharad Pawar said last week.

 

"We will probably import more wheat, and a tender could be floated in a week or two, though we are not in a hurry," Pawar said.

 

India has already bought 500,000 tonnes of wheat from AWB Ltd. (AWB.AU)

 

Pawar said the proposed imports are to augment reserves and meet exigencies such as droughts and floods.

 

India's wheat harvesting has also begun in many parts of the country, such as Gujarat and Madhya Pradesh.

 

The government has also started procuring wheat from farmers at the intervention price of INR6,500/tonne, to augment its reserves and supply wheat for its subsidized food sales program for low-income families.

 

According to government officials, wheat procurement by the government will gather pace around April 14, when harvesting begins in India's largest wheat producing province, Punjab.

 

In Pakistan, where wheat harvesting has begun, Prime Minister Shaukat Aziz has said the government won't allow any sharp fall in wheat prices amid expectations of a bumper harvest, reported the newspaper Dawn.

 

"If required, the government will buy the entire wheat crop, export the surplus and sell (wheat) flour in the local market at the lowest possible price," Aziz said.