September 11, 2006

 

Asia Corn Outlook: Premiums may fall on US crop

 

 

Premiums for corn and wheat delivered to Asia may fall in the week ahead, as the harvest is approaching for the U.S. corn crop, while weather conditions are improving for the developing U.S. wheat crop.

 

Demand generally remains lackluster for U.S. wheat, though Alaron Commodities analyst Tim Hannagan said in an online commentary that "India remains the wild card."

 

"They (Indian buyers) are sending signals that they need large quantities of wheat. They are more likely to buy lower-quality wheat for value (for lower prices), like (other) Asian markets (do). Countries with more poor quality or lower protein wheat than they care to admit are plentiful. No one has an advantage. It leaves us as good a chance as any to garner some of their (Indian) business, but it could be 30-90 days away."

 

Over the weekend, India's federal government issued a formal statement allowing private traders to import wheat duty-free compared with the previous 5% duty.

 

Some analysts expect private traders to import up to a million tonnes of wheat this year.

 

Also over the weekend, India's federal government bought a total of 1.67 million tonnes of wheat from four international trading houses for around US$223-US$238 a tonne, cost and freight basis, as its public tender concluded last week.

 

The four trading houses were Toepfer, Concordia, Glencore and AWB Ltd.

 

Of the 1.67 million tonnes, AWB Ltd. will supply 595,000 tonnes, Glencore 680,000 tonnes, Concordia 135,000 tonnes and Toepfer 260,000 tonnes.

 

The deliveries will be made between November and February at the ports of Visakhapatnam, Chennai, Kandla and Mundra.

 

In the rest of Asia, Japan's Ministry of Agriculture last week bought a total of 70,000 tonnes of wheat from the U.S. and Canada in a tender concluded Friday.

 

Three South Korean flour mills - Daehan, Daesun and Samhwa - jointly bought 22,600 tonnes of U.S. No. 1 wheat in a tender concluded last week.

 

The Taiwan Flour Mills Association bought 49,510 tonnes of U.S. No. 1 wheat from trading house Columbia Grains in a tender concluded last week.

 

Meanwhile, a report by the China National Light Industry Federation said the country produces 46 billion packages of instant noodles every year, which uses up 10% of the nation's annual wheat harvest.

 

While Chinese consumers use up 30 billion packs of these noodles, the rest are exported, mainly to Indonesia and Japan.

 

Last week, 11 of China's leading noodle makers signed an agreement to further improve the nutritional value of their products. These producers are also keen on diversifying the choice of noodles available to Chinese consumers.

 

In corn deals last week, the Seoul branch of the Korea Feed Association bought 110,000 tonnes of U.S. corn in private talks from trading house Cargill.

 

South Korea's Major Feedmill Group bought 55,000 tonnes of optional-origin corn in private negotiations with trading house Cargill last week.

 

Traders said it is likely the entire corn shipment will be sourced from China.