July 10, 2007

 

Asian grain importers seen buying amid high freight rates

 

 

Asian grain importers are seen to buy corn and soybeans this week despite unceasingly high freight rates.

 

Low US corn prices are expected to lure Japanese importers seeking October-December shipments, traders said on Monday (July 9).

 

US corn futures in after-hours electronic trade on the Chicago Board of Trade were down 6 to 8 cents per bushel on Monday due to forecasts for cooler weather in the US Midwest, with July down 7-¾ cents at $3.26-3/4.

 

The level was near an eight-month low below US$3.2 marked last week after the USDA pegged 2007 US corn plantings at 92.888 million acres, the largest in more than 60 years.

 

Japanese importers are said to nearly complete its requirements for the July-September period but were hesitant to make purchases for the October-December period.

 

But the low US corn prices could lure feed makers, traders said.

 

Total costs for October-December cargoes would be relatively cheap despite a rise in freight rates as compared to July-September shipments due to current low levels in CBOT, said a Japanese trader.

 

The Baltic Exchange's Panamax freight index, a measure of global dry commodity demand for typical 80,000 tonne cargoes, hit a fresh record high on Friday of 6,925 points.

 

The index was up more than 60 percent from the start of 2007 against the backdrop of port congestion in Australia and strong demand for natural resources.

 

High import costs postponed South Korea's feed maker Nonghyup Feed Inc to purchase Friday (July 6) 275, 000 tonnes of corn for September and November

 

Spot voyage fixtures for modern panamax rates for the benchmark US Gulf to Asia route are at around US$78 to US$79 per tonne, shipping brokers in Seoul said. The rates have risen more than 40 percent so far this year.

 

A trader at an international grain house said Nonghyup is likely to seek corn in private negotiations or tender if CBOT falls further and freight rates would not fall from the current level.

 

As for soybeans, the Korea Corn Processing Industry Association is likely to re-tender for 110,000 tonnes of non-genetically modified soybeans for October arrival, traders said.

 

South Korea's state-run Korea Agro-Fisheries Trade Corp. is seeking 21,000 tonnes of non-genetically modified soybeans which is set for arrival on October 25 at the port of Incheon.

 

Despite high importing cost, Japanese oilseed crushers have completed their requirements for August shipments, and some users started to talk about the September shipments.

 

A trader at a Japanese trading firm said, adding that 20 to 30 percent of the country's monthly import of some 330 tonnes for crushing use has been fulfilled.

 

In Taiwan, imports of US wheat, corn and soybeans are sought this week in regular tendering, despite hot seasonal weather dampening demand.

 

The Taiwan Flour Mills Association will hold a tender to buy a total of 88,890 tonnes of No.1 US wheat on Tuesday (July 10) for shipment between August 21 and September 19, said a trader.

 

The purchase will also be followed on Wednesday (July 11) by the Taiwan Sugar Corporation which will hold a tender to buy up to 29,000 tonnes of US corn and as much as 16,000 tonnes of US soybeans.