May 23, 2011

 

Malaysia and Indonesia purchase US new-crop wheat

 

 

Flour mills in Malaysia bought some 80,000 tonnes of US new-crop spring wheat while Indonesia took around 20,000 tonnes, taking advantage of a drop in global prices at the end of last week.

 

The deals were signed between US$440-US$470 a tonne, including cost and freight (C&F), for cargoes to be delivered in September, regional traders said on Friday (May 20).

 

The pace of Asia's grain purchases is expected to slow down in the weeks ahead, following this week's rally in corn and wheat prices on the back of adverse weather hurting crops.

 

"They just came in and bought last Friday (May 20) to cover some demand for the new-crop US wheat," said one senior grains trader with an international trading company in Singapore.

 

"We saw very little business this week and it will remain slow in the coming days because prices have gone up a lot in a short period."

 

CBOT July-delivery wheat has risen around 11% this week, on track for its biggest weekly gain after three-straight weeks of losses. Corn is up 10% in its strongest weekly performance since October, after two consecutive weekly drops.

 

Excessive wet weather and flooding in the eastern US Midwest is delaying corn plantings, while drought in Kansas, Oklahoma, and Texas has withered away prospects for the new winter wheat crop.

 

Still, Pakistan was aggressively selling cargoes on competitive prices, traders said. A flour mill in the United Arab Emirates has purchased 40,000 tonnes of milling wheat from Pakistan in a tender this week. The price was between US$345-US$350 a tonne C&F.

 

"There is a lot of interest in Pakistani wheat, which is probably the cheapest origin at the moment," said another trader.

 

Australia prime wheat was quoted at US$400 a tonne, C&F, to Asia this week and Australian prime hard wheat was being offered above $500 a tonne. US spring wheat was quoted between US$470-US$500 a tonne, depending on the protein levels.

 

Japan's farm ministry bought a total 206,741 tonnes of milling wheat from the US and Australia as planned in a tender this week. It bought western white, hard red winter and dark northern spring varieties of wheat from the US, while taking standard white wheat from Australia.

 

There was crop-friendly weather in Australia, which could bring some good news to buyers hit by rising prices.

 

Rain has fallen across Western Australia this week, improving crop prospects for what is typically the country's top wheat exporting state, where hopes had been fading for a pick-up in production following a prolonged drought. In the feed grain business, buyers stayed off the market this week following the rally in US prices.

 

Last week, two South Korean feedmakers purchased about 269,000 tonnes of optional-origin corn for arrival in August after prices fell to near six-week lows.

 

Asian feed makers will be closely watching corn and soy planting progress reports to be issued by the USDA this week, although not much improvement is expected with more rains forecast for the US Midwest.