July 24, 2007

 

Asian grain importers seen to buy this week amid high freight rates

 

 

Major Asian grain buyers are expected to buy soybean, soymeal and corn this week despite persistently high freight rates.

 

Spot voyage fixtures for modern panamax rates for the benchmark US Gulf to Asia route are being quoted at around US$86 to US$92 per tonne, traders in Tokyo and Seoul said. The rates have risen about 10 percent in the past week.

 

Recovery in soybean prices in the Chicago Board of Trade (CBOT) has prompted importers to buy the grain.

 

Midwest basis tenders for soybeans against CBOT weakened further on Friday (July 20), pressured by poor export demand and ample nearby supplies, US dealers said.

 

Tokyo soybean traders said about a half the requirements for September shipments had been completed as Japan's imports of US soybeans for crushing use amount to 330,000 tonnes a month.

 

The Baltic Exchange's Panamax freight index, a measure of global dry commodity demand for typical 80,000 tonne cargoes, has been hovering near a record high of 7,313 marked on July 13.

 

It stood at 7,109 on Friday (July 20), up more than 60 percent from the start of 2007 against the backdrop of port congestion in Australia and surging demand for natural resources.

 

As for corn imports, however, Japanese importers have been hesitant to step into the October-December period after completing their requirements for July-September due to high freight costs.

 

South Korean importers are set to seek corn and soymeal this week, traders said.

 

CBOT corn futures shed almost 5 percent last week on forecasts for wetter weather in the US Midwest, easing crop concerns.

 

Buyers, however will be disappointed as actual prices of total corn importing costs is about to reach US$90 per tonne due to high freight costs, according to a South Korean trader.

 

Buyers will decide whether to move after checking offering prices in a tender of Nonghyup, the trader said.

 

Nonghyup Feed, South Korea's biggest feed maker, issued a tender to buy 110,000 tonnes of corn for September and October arrival. The tender was due to close at 0730 GMT on Monday.

 

The Korea Corn Processing Industry Association is also seeking 55,000 tonnes of optional-origin, non-genetically modified corn for October arrival.

 

South Korean importers are also likely to seek soymeal for November and December this week.