August 30, 2004

 

 

Asia Corn Outlook: Prices To Rise On Possible Freight Hike

Prices of corn and wheat delivered to Asia are expected to rise due to an anticipated small rebound in the freight rates of Panamax-sized cargoes, trade participants said Monday.
 
In the Panamax-sized cargo market, rates have room to go up on the benchmark routes from the Pacific Northwest to Japan or from the U.S. Gulf to Japan, after falling too quickly in the past week compared with the rates of smaller vessels.
 
Panamax-sized cargoes are widely used in shipping everything from iron ore to grains.
 
Monday, Panamax-sized cargoes were offered at $50 a metric ton from the U.S. Gulf to Japan, compared with $55/ton for a small handy-sized vessel of 20,000 tons running on the same route.
 
"No matter what happens in the long term, the rates of (Panamax cargoes) in the next week or two will rebound to catch up with other vessel markets," said a Tokyo-based trader with a Japanese trading house.
 
Japanese corn buyers have finished purchasing for September shipments and are now looking at prices of shipments from October to December.
 
U.S. corn is offered at $170/ton, cost and freight from the U.S. Gulf to Japan for October shipment. The price has been stable since last week, traders said.
 
In Taiwan, Great Wall Enterprise Co. will seek 56,000 tons of U.S. No. 2 corn in a buy tender to be held Tuesday.
 
Also Tuesday, the Taiwan Flour Millers Association will hold a buy tender for 43,000 tons of U.S. No. 1 wheat. The tender was postponed from last week due to the impact of a typhoon.
 
The shipment date of the corn cargo is set between Oct. 5-19 from the Pacific Northwest.
 
Buyers Eyeing Thai Corn Due To Low Price, Proximity
 
Thailand is expected to export around one million tons of corn in the new marketing year from September to August, according to traders.

 

A surplus of corn is now available to other markets due to shrinking domestic demand. Thailand's poultry industry has been hit by a recent outbreak of bird flu, anw exports to Japan and Europe are restricted to cooked products, traders there said.

 

Thai corn is offered Monday at $120-$125/ton, free on board from Thai ports.

 

Malaysia has been buying Thai corn lately, attracted by the flexible delivery terms. Thai exporters are offering deliveries of several thousand tons of corn in small vessels.

 

Freight rates for such small vessels are quoted at $15/ton from Thailand to Malaysia.

 

Buyers such as South Korea's Major Feedmill Group are also interested in Thai corn for its low price and proximity. MFG is likely to buy two to three Panamax-sized cargoes of corn this week.

 

The price of Thai corn to South Korea is below $150/ton, C&F for December or January shipment. U.S. or South American corn is offered at $153-$155/ton.

 

South Korean buyers said the gap between Thai corn and corn from other origins needs to widen in order to attract them.

 

Concern over a high level of aflatoxin in Thai corn is one reason buyers demand cheaper prices, they said.

 

Buying corn from Thailand or elsewhere also depends on prices on the Chicago Board of Trade, traders said. As U.S. and South American corn is priced against CBOT contracts, any dip in CBOT prices will make offers from the U.S. and South America more appealing than Thai corn, they said.