May 17, 2010
South Korea slows corn imports
South Korea has slowed purchases of corn as recent imports by China have elevated prices well above expectations, trading executives said.
South Korea, the world's second largest corn importer, needs to buy around 1.3 million tonnes of corn for September-October shipment but has yet to secure any of those requirements due to unattractive prices.
"There haven't been many tenders issued recently because prices are too high," a Seoul-based executive at a global trading company said. There is a gap of at least US$10-15/tonnes, on delivered basis, between the price ideas of buyers and sellers of US corn, he said.
Importers in South Korea were expecting the July corn futures contract on the Chicago Board of Trade to fall below US$3.50/bushel, but recent import deals by China dampened their hopes.
CBOT July corn futures rose to about US$3.84/bushel on Wednesday (May 12) and ended at US$3.73 Thursday (May 14).
Importers in South Korea are looking to buy US No. 3 corn at about US$220/tonnes, basis cost and freight, and No. 2 corn at US$223-224/tonnes. South American corn is even costlier by another US$10/tonnes because of better quality, congestion at ports and higher freight rates.
"There's enough time to make purchases for September and therefore importers don't want to rush into deals," said a trader in Seoul. He said there are also other issues involved because the quality of corn being shipped out of the US Pacific Northwest is poor.
Cargoes from the US Gulf may be preferred, but they command a premium of around US$2/tonnes over corn shipped from the US West Coast.
During two weeks, from late March onwards, South Korea purchased close to 500,000 tonnes of US corn, mostly for August and September shipment, at prices between US$217-225/tonnes, on cost and freight basis.
Thereafter, buying became sluggish and some tenders issued in recent weeks were cancelled, citing higher prices, as importers pinned their hopes on a bumper corn crop in South America and excellent progress in plantings in the US to weigh on the market.
