June 19, 2007

 

Rallying US corn, soy may cap demand from Asia

 

 

High US corn and soy prices in the Chicago Board of Trade (CBOT) are likely to dampen import requirements from grain and oilseed importers in Asia, traders said on Monday (June 18).

 

An official from the Korea Feed Association said high freight rates and CBOT prices have pulled corn import prices to a ten-year high, same level this year.

 

The official added importers have to wait for a dip in prices.

 

CBOT corn prices increased more than 2 percent to a 3-1/2-month high early on Monday on crop worries due to hot and dry weather in the eastern part of the US Midwest.

 

July corn prices in after-hours electronic trade on the CBOT were trading at US$4.27-1/4 per bushel by 0635 GMT, up 8-1/4 cents.

 

July soybeans were up 13-1/2 cents at US$8.60-3/4 per bushel.

 

Some analysts expected the US government to lower its corn and soybean ratings by 2 to 4 percentage points in the good-to-excellent category.

 

In Tokyo, corn importers are bracing for announcements later this week by Japanese feed makers on their product prices for the July-September period.

 

A price hike in imported corn, the main component of livestock feed in Japan, is expected to boost compound feed prices by about 1,000 yen (US$8.10) a tonne on average for the quarter to around 54,700 yen, they said.

 

It would be the fourth straight quarter farmers pay more from the previous quarter.

 

A trader at a Japanese company said farmers are vulnerable to a continued rise in feed prices and they will depend on the demand.

 

Despite expected make-up payments from price stabilisation funds raised by feed makers and users, farmer feed costs for July-September would be around 10 percent higher than a year earlier.

 

Also, concerns that China may not issue a second batch of corn export quotas following permits issued for some 1.5 million tonnes in April have overshadowed Japanese buying.

 

A Tokyo-based corn trader said South Korean buyers have quickly shifted their focus to US corn from Chinese corn in the past few months and covered their needs up to October shipments of the US origin.

 

But some Japanese importers are behind the curve and have recently bought August shipments of the US origin with higher prices, he said.

 

As for soybeans, activity is expected to be slow this week.

 

Japanese soybean importers have almost finished their requirements of US soybeans for July shipments, but they are reluctant to start those for August delivery as they expect a fall of freight rates, traders said.

 

($1=123.50 yen)