April 24, 2006

 

Asia Corn Outlook: Premiums may fall; CBOT likely down

 

 

Premiums of wheat and corn delivered to Asia may fall in the week ahead, as improving weather conditions for the U.S. crop may pressure CBOT corn and wheat futures over the next several days.

 

CBOT corn and wheat futures were mixed in the past week, with an increasingly positive weather outlook for wheat and corn crops damping sentiment.

 

On the demand side, South Korea was a major importer of corn last week, unchanged from the previous few weeks.

 

China's continued absence from the corn export market has boosted U.S. corn sales to Asia, U.S.-based analysts said.

 

However, a commentary on CBOT's Web site said: "Jilin province in China is requesting permission (from the government) to resume exports of corn due to hefty stocks, but no decision is likely until government officials have a better feel of the size of the upcoming crop."

 

In major import deals last week, South Korea's Nonghyup Feed Inc., or NOFI, bought 110,000 metric tonnes of U.S. corn from trading house ADM in a tender.

 

While one shipment of 55,000 tonnes will be supplied at US$139.84/tonne, the other shipment of 55,000 tonnes will be supplied at US$140.34/tonne.

 

The Korea Corn Processing Industry Association, or Kocopia, has bought a total of 110,000 metric tonnes of optional-origin corn from trading house Glencore in a tender concluded last week.

 

While corn of Chinese origin will be supplied at US$141.49/tonne, corn of U.S. or South American origin will be supplied at US$151.49/tonne.

 

Meanwhile, Taiwan's Members Feed Industry Group, or MFIG, has bought 60,000 metric tonnes of U.S. corn from trading house Cargill in a tender last week.

 

At present, the premium for corn delivered from the U.S. to Taiwan is 111.39 U.S. cents/bushel above the CBOT July contract.

 

Separately, Japan's Ministry of Agriculture, Forestry and Fisheries bought 101,000 tonnes of wheat from Australia, Canada and the U.S. in a tender last week.

 

The Taiwan Flour Mills Association also bought 40,000 tonnes of U.S. No. 1 wheat from trading house Toepfer in a tender concluded last week.

 

In other news, a prominent Indian farmers' union leader told Dow Jones Newswires that the country's wheat growers oppose the government's recent 500,000-tonne Australian wheat import, because the government doesn't allow farmers to export wheat.

 

"Despite the fact that the domestic wheat harvest is imminent, the government went ahead and placed import orders for 500,000 tonnes of wheat in March. If they want to look at overseas options for procuring wheat, the same option should also be made available to Indian farmers," said Bhupinder Singh Mann, president of All India Kisan Co-ordination Committee, a major Indian farmers' union.

 

Meantime, India's Food Minister Sharad Pawar Friday said India will import 3 million metric tonnes of wheat in 2006, in addition to the 500,000 tonnes already purchased last month.

 

"The imports will take place immediately to ensure adequate buffer stocks in government granaries," Pawar told reporters.

 

The government has also raised the local intervention price of wheat by INR500/tonne, Pawar said. This hike has raised the intervention price of wheat to INR7,000/tonne.

 

The Indian government buys wheat and rice from farmers at a state-set intervention price, which it uses to shore up its reserves as well as sell to low income families at subsidized prices.

 

The new price will be effective on a retrospective basis from March 20, 2006.

 

The harvesting for India's wheat crop began in late March and will continue until May.

 

Meantime, the Indo-Asian News Service reported that the Pakistani government is considering a ban on sugar imports from India. The Pakistani government would prefer to barter wheat for sugar, since Pakistan has surplus wheat stocks this year.

 

"A proposal in this regard has been given by the Indian authorities and may be accepted soon," the agency reported, quoting unnamed officials in Pakistan.