July 17, 2006

 

Asia Corn Outlook: Premiums may rise on weather

  

 

Asian corn and wheat premiums may rise in the week ahead, led by expectations of continued gains in wheat and corn futures on the Chicago Board of Trade.

 

CBOT corn and wheat futures are likely to get a boost from hot and dry weather conditions that continue to prevail in the U.S.

 

In Asia, two of the largest corn and wheat importing nations, South Korea and Japan, are closed for a holiday on Monday.

 

However, Japan's federal government is likely to hold its weekly wheat import tender Tuesday, where it may seek 100,000-150,000 tonnes of wheat from the U.S., Canada and Australia.

 

In corn, a U.S.-based analyst said Asia may play catch up this week and step up corn imports after last week's dull purchase.

 

In corn import deals last week, Taiwan's Members Feed Industry Group, or MFIG, bought 60,000 metric tonnes of U.S.-origin corn from trading house Agrex in a tender.

 

The current premium for corn delivered to Taiwan from the U.S. is around 150 U.S. cents/bushel above the CBOT September contract.

 

Many Asian feed buyers are increasingly seeking feed wheat as an alternative to corn imports, as the current spell of dry weather in the U.S. has driven up CBOT corn futures.

 

Feed mills, especially in Philippines, are increasingly buying feed wheat as the government has disallowed the purchase of corn at a reduced import duty of 35%.

 

"In the Philippines, I think feed buyers have been left no option but to import feed wheat, since the government hasn't allowed more corn imports at a lower 35% import duty," said Ricardo Pinca, vice-president of Philippines Association of Feedmillers, Inc.

 

The normal import duty for corn in Philippines is 50%.

 

In China, corn exports fell 54% on year to 2.27 million metric tonnes, the General Administration of Customs said Wednesday.

 

Corn exports in June reached 10,000 tonnes, it said on its Web site, citing preliminary data.

 

In China's local markets, trading volumes for corn remain low as supplies have mostly dried up since farmers have sold most of their stocks.

 

Chinese feed buyers remain concerned about possibility of further outbreak of bird flu and are reluctant to buy large amounts of corn.

 

In India, agriculture minister Sharad Pawar said that current wheat stocks are adequate in meeting local demand.

 

When asked whether the government plans further imports of wheat, he said: "If the stocks fall short of requirement, we will see what needs to be done."

 

The government has placed orders to import 3.5 million tonnes of wheat so far in 2006.