May 14, 2012

Asian importers slow purchases as feed grain prices fall

Asian grain importers have slowed purchases as feed grain prices are expected to drop, as a result of the US market.

The USDA's first estimates for this year's harvest and next year's demand showed domestic corn stocks will surge from a near record low to a seven-year high by September 2013, as farmers plant an early crop.

CBOT July corn has lost more than 5%, the biggest loss since mid-January, while July soybeans fell for a second straight week by more than 2%. July wheat has dropped 1.5% after losing more than 6% last week.

In the Asian market, South American corn values are expected to fall after the CBOT futures slid to a 14-month low on Thursday, after the agriculture department forecast stocks of the grain would climb in autumn to a seven-year-high.

Argentine corn was quoted about US$300/tonne, C&F, in Southeast Asia and could fall to around US$290-$295/ tonne. "The premiums really depend on farmer selling and how tight the supply is," said another Singapore trader who supplies South American corn to mills in Asia.

South Korea's Korea Feed Association bought 55,000 tonnes of optional-origin No. 3 yellow corn via a tender on Thursday at US$271.40/tonne, C&F, while Major Feedmill Group bought 70,000 tonnes of corn from Japan's Mitsui at US$272.99/tonne.

Meanwhile, Philippine feed millers bought around 55,000 tonnes of Australian feed wheat for shipment in August and September at US$270/tonne-including cost and freight (C&F) - at least US$10 lower than the market prices, some traders say. The freight plus the current FoB (freight on board) price should work to around US$280-$285/tonne, a Singapore-based trader said.

The millers initially intended to buy 105,000 tonnes but could not get many offers for July shipment due to the lack of capacity at the Australian ports, traders said.

The Taiwan Flour Millers' Association bought 48,700 tonnes of milling wheat from the US in a tender for the same volume which closed on Thursday.

US soft white wheat was quoted around US$285/tonne, C&F, in the Asian market, while hard red winter wheat with 11.5% protein was about US$310/tonne. The spring wheat was offered about US$370/tonne.