April 17, 2007

 

Major Asian markets monitored on corn purchases

 

 

Asian frontrunners Japan, South Korea and China are being observed by traders after its corn purchases and tenders were made this week.

 

South Korean importers are seen to buy 500,000 tonnes of corn through a tender this week, while traders in the region were monitoring the developments in Chinese corn after purchases by Japanese importers last week. 

 

South Korean feed makers plan to buy the corn for October and November arrival through a tender as major associations such as Korea Feed Association and Major Feedmill Group will jointly seek nine cargoes of optional-origin corn.

 

The huge purchase is to gain bargaining power in a volatile market, industry officials said.

 

Corn futures on the Chicago Board of Trade (CBOT) have been unstable as US farmers prepare to plant the largest amount of their land to corn since 1944.

 

On the other side, traders are eyeing developments in Chinese corn after Japanese importers bought some 10,000 tonnes of Chinese grain for shipment in May last week.

 

Negotiations are under way for more cargoes within an initial quota of over 1 million tonnes Beijing has given for corn exports after March, but the high prices could put off Japanese buyers.

 

Japanese traders said the cost and freight price of Chinese origin corn for May shipment is higher at US$5 a tonne compared to its April shipments of US origin, both based on a Panamax vessel.

 

Similarly, the price of Chinese corn for June shipment is offered US$10 higher than that of May shipments from the United States, and US$15 higher for July against June.

 

Japanese soybean buyers were sluggish in their purchases for June shipments after nearly completing purchases for May, but strong freight rates and high volatility in Chicago futures are making them wary on buying large volume.

 

Japanese importers could have fulfilled about 50 percent of the monthly requirements, which they typically buy about 240,000 to 250,000 tonnes on average each month, traders said.

 

According to a Tokyo-based soybean trader, the high levels of freight rates as well as the volatility in Chicago hold the Japanese from making huge purchases.

 

He added Japanese buyers are having a hard time finding a suitable timing for the purchase as they wait for prices to settle down.

 

In the wheat market, South Korean flour millers could issue tenders to buy US No. 1 wheat for May and June shipment.