September 4, 2007

High grain prices deter South Korean and Taiwan importers from buying

Importers in Taiwan and South Korea are having difficulty achieving offers for their grain tenders as record dry bulk freight rates and grain prices prompt sellers to quote higher prices.

Although there is a lot of latent demand in October, buyers are deterred from buying due to high prices, a trader in Taipei said.

They are holding out until the last moment before buying, he added.

Freight rates have reached record highs due to strong raw material demand from China and India, along with port congestion problems in South America.

There have been no takers for Taiwan's tender for US corn and soy based on prices it is offering and authorities have had to re-tender. South Korean buyers are having difficulties getting grain at prices they want as well.

The difficulties may have resulted in a 17-percent drop in Taiwan's corn imports in the first half of the year over the same period last year.

Exporters could not offer corn for nearby month shipments due as vessels at the Gulf are heavily booked, said a trader at an international grain house.

Freight rates from the US Gulf to Asia route are being quoted at US$96-$97 per tonne, having risen more than 70 percent so far this year.