June 12, 2007

 

South Korea seeks soy, corn this week; Japan, Taiwan to buy grains on lower freight rates

 

 

Importers from South Korea is expected to purchase corn and non-genetically modified soybean this week, while buyers in Japan and Taiwan are also seen to buy grain shipments as freight rates continue to fall.

 

The state-run Korea Agro-Fisheries Trade Corporation will seek 100,000 tonnes of non-genetically modified soybeans for 2008 arrival on Wednesday.

 

Japan's oilseed crushers, on the other hand, have nearly completed their requirements of US soybeans for July shipments after some deals were made last week, traders said.

 

A Tokyo-based soybean trader said Japanese buyers are not in a hurry to seek deals for its August requirements as they still wait for a further drop of FOB (freight-on-board) Gulf basis rates.

 

Spot voyage fixtures for modern Panamax rates for benchmark US Gulf to Asia routes are estimated at around $75 per tonne, shipping brokers said. The rates were at more than US$80 in early May.

 

The Baltic Exchange's Dry freight index, which tracks shipping goods, such as grains, coal, iron ore and sugar on major export routes, fell 2.4 percent to 5,736 on Friday, down more than 10 percent from an all-time high marked in mid-May.

 

While Taiwanese buyers remained still on the trade, traders said buying groups would be eyeing the lower freight rates, with one saying the Corn Industry Procurement Association could seek a shipment.

 

a Taipei-based merchant with a major global trading house said the steep fall of freight rates could likely prompt purchasing this week as demand is also firmer for the Dragon Boat festival.

 

Requirements for meat ahead of festivals for traditional family feasts usually increases demand for feed, which is largely made from corn and soybeans.

 

A monthly US Department of Agriculture crop report, to be released later this week, is awaited by traders as dry weather in the US producing areas during the weekend was viewed as bullish for the Chicago market, said the Japanese trader.

 

As for corn for feed use, Japanese buyers made little progress last week in purchasing for the third-quarter period and were expected to wait until freight rates for the US Gulf-Japan routes fall further, traders said.

 

About a quarter of the quarterly requirements remains to covered, a manager at a Japanese trading firm said.

 

South Korean corn buyers are expected to be careful on active purchases as Chicago grain prices are crawling up to near US$4 a bushel, but will continue to seek September and October shipment through private negotiation, traders said.

 

July corn futures at the Chicago Board of Trade were trading at US$3.92 per bushel by 0717 GMT, up 10 cents, on dry weather in parts of the United States that threatened to harm the corn crop.

 

Buyers will seek only one or two cargoes this week as corn prices remain high despite a halt on the rallying freight rates, according to a trader.