May 2, 2006

 

Asia Corn Outlook: US weather to drive premiums

 

 

Premiums for wheat delivered to Asia may rise in the week ahead on continued concerns over how the U.S. wheat crop may be affected by the weather, while corn premiums may swing either way depending on the weather outlook for the U.S corn crop.

 

For most of last week, wheat futures on the Chicago Board of Trade closed higher as funds bought, amid weather concerns for the U.S. wheat crop.

 

CBOT corn futures were mixed in the past week, and the price movements this week will likely be guided by weather concerns.

 

Corn buying is expected to be mostly quiet this week, as South Korean buyers have largely fulfilled their July-to-September needs and Japan will be on holiday from Wednesday to Friday.

 

A buyer in Taiwan said international prices of corn were rising largely because of demand for corn in ethanol production, which is being seen as an alternative to fossil fuels in many countries.

 

At present, premiums for corn delivered to Taiwan from the U.S. are around 98 U.S. cents a bushel above the CBOT September contract.

 

In South Korea, a Seoul-based analyst said only Nonghyup Feed Inc. is expected to hold a tender for buying corn this week, though the quantity of purchase isn"t known.

 

In major deals in corn last week, Taiwan's Members Feed Industry Group, or MFIG, bought 60,000 metric tonnes of U.S.-origin corn from trading house Cargill in a tender concluded late Friday.

 

In wheat, four South Korean flour mills jointly bought 21,000 metric tonnes of U.S. No. 1 wheat from trading house Cargill in a tender concluded last week.

 

The four flour mills participating in the tender were: Dongah, Daehan, CJ and Youngnam.

 

Japan's Ministry of Agriculture, Forestry and Fisheries bought a total of 103,400 tonnes of wheat from the U.S., Canada and Australia in a tender last week.

 

In other news, India's federal government is considering a cut in wheat import duty for direct users such as flour mills and biscuit makers.

 

"The government will only import 3.5 million tonnes of wheat for its subsidized sale program, but we are seriously thinking of allowing private players to import on their account," Food Minister Sharad Pawar said last week.

 

At present, private importers have to pay a 100% duty on imported wheat.

 

Meantime, a controversy arose in India over the past few days, as government officials apparently detected higher-than-permissible levels of pesticides in 50,000 tonnes of wheat that arrived from Australia to India's Chennai port.

 

However, a government-run Indian food laboratory has cleared a few samples from an Australian wheat cargo in quality tests, a senior official at the State Trade Corp. of India, or STC, told Dow Jones Newswires late Monday.

 

India's state-run State Trading Corp. bought 500,000 tonnes of wheat from Australia in a tender in March.