April 17, 2009

Bangladesh is likely to buy wheat in the weeks ahead to replenish stocks while China is expected to continue buying soy aggressively on steady crushing margins.

 

Bangladesh, which buys two million tonnes of wheat annually, bought 850,000 tonnes of wheat in the first quarter due to lower world prices.

 

Bangladesh has not contracted anything for the past one month or more but local stocks are starting to dwindle and there are some interests for May and June shipments, said a Singapore-based trader.

 

While Australian wheat is quoted about US$280 per tonne, including cost and freight (C&F) to Bangladesh, lower-grade Black Sea wheat costs about US$190 per tonne.

 

Bangladesh mainly buys Black Sea wheat and imports smaller quantities of Australian and Canadian wheat for blending.

 

A Dhaka-based trader said buying has been slow as importers were anticipating further declines in market prices.

 

The USDA last week increased its outlook for Bangladesh's 2008-09 (July-June) wheat imports to 2.3 million tonnes from the previous estimation of two million tonnes.

 

Traders expect Bangladesh to buy more wheat this year as lower global prices will increase consumption and as domestic production stagnates at one million tonnes.

 

Most Southeast Asian countries were not aggressive in the market, as they buy on a hand-to-mouth basis, said another Singapore trader.

 

Taiwan bought 25,000 tonnes of Australian wheat at around US$280 per tonne C&F last week for May shipments, said traders.

 

China has booked six soy cargoes from Brazil for June shipment at US$435-438 per tonne C&F, and two cargoes from the US for August delivery, said Singapore traders.

 

Each cargo is between 50,000 and 60,000 tonnes.

 

Demand for imported soy will be strong and at higher levels for the near-term as the cost for imports is still lower, said Song Yang of Bohai Futures in Dalian.

 

China's soy imports are still going strong due to good crushing margins following a recovery in soymeal demand, and traders expect the momentum to last until June.

 

Crushing margins in China ranged RMB200-300 (US$29.3-US$44) per tonne, compared with negative margins in February, traders said.

 

Quarantine authorities in Guangdong have not stopped any US soy cargoes despite finding disease in 10 batches of samples over the past three months, said a trader manager in a major crusher in Guangzhou.

 

China's robust soy imports lifted Chicago soy futures Sc1 for the sixth straight session on Thursday (Apr 16) to their highest level in six months.

 

South Korea, Asia's leading grain importer, also bought two shipments of 43,800 tonnes of US wheat from Cargill.