September 17, 2010

Japan's Q4 corn prices not yet finalised

Pricing for most of Japan's feed corn is yet to be done, even as almost 85% of its requirements for the October-December quarter cargoes has been already covered, trading executives said Thursday (Sep 16).

In this regard, Japan may have to pay much higher for its corn imports despite having made purchases when prices were relatively lower.

Japan's feed corn requirements for the next quarter are around 3.1 million tonnes, of which 2.6 million tonnes have been purchased so far. Purchases have been made by fixing a premium over the corn futures on the CBOT.

But final pricing by locking in the futures price of one particular day, over which the premium will be added, is yet to be made for most of the cargoes, an executive familiar with the deals said. Final pricing has been done for hardly around 300,000 tonnes at US$260-$265/tonne but the rate will be much higher for the rest due to the latest spurt in prices.

Purchases have been made around US$2.35 over the December futures contract on the CBOT, basis cost and freight.

The December corn futures contract on the CBOT closed or 0.1% higher at US$4.95 1/4 a bushel Wednesday (Sep 15). Prices have hit their highest level in almost two years due to substitution of feed wheat with corn and lower-than-expected yields in the US.

Buyers in Japan usually finalise the pricing months before the actual shipment but had been delaying it expecting a downward correction due to a bumper harvest in the US but their hopes have now been belied.

Japan is the world's largest importer of corn, purchasing more than 16 million tonnes annually and accounts for a significant 17% of global trade.