September 20, 2012

 

 

With buyers locking in deals for wheat, corn and soy needs to take advantage of lower prices, Asian demand for grains will likely rise over the next few days.

 

"Fundamentals are strong and weather is still a concern, but at least prices are off the record they touched in recent weeks, which is a welcome development," said a Singapore-based executive with a global commodity trading company.

 

The near-month soy futures contract on the Chicago Board of Trade, which hit a record US$17.9475 a bushel on September 4, has since fallen sharply. The November contract ended at US$16.41/bushel Tuesday (Sep 18). It was trading at US$16.645 at 1110 GMT.

 

Corn has fallen to below US$7.50/bushel from a record of US$8.4375/bushel on August 10, while wheat is around US$8.80/bushel, down from a multiyear high of US$9.4725/bushel reached July 23.

 

Speculators are liquidating long positions on the bourses, but cash buyers are seizing the opportunity to scoop up cargoes at reduced price levels.

 

South Korean flour millers Wednesday (Sep 19) purchased a 28,700-tonne cargo of US wheat from Louis Dreyfus Commodities for shipment in December, traders said. They bought soft white wheat with 9.5% and 8.5% protein, respectively, around US$323/tonne and US$328/tonne, free-on-board, the executives said.

 

The mills also bought Hard Red Winter with 11.5% protein and Dark Northern Spring with 14% protein, respectively, around US$362 and US$378/tonne, FOB.

 

Last week, when prices were up to US$10/tonne higher, millers in South Korea purchased two cargoes of wheat totalling almost 50,000 tonnes from Columbia Grain International for December and January shipment.

 

Recent rains ahead of the harvest in major wheat-growing areas of Australia and also in the US ahead of winter plantings there have eased concerns about a grain shortfall. Speculative long liquidation of grain futures has accentuated the downward price trend, prompting buying interest across Asia.

 

South Korean buyers are also seeking soymeal in a tender that closes later Wednesday (Sep 19).

 

The Kaohsiung branch of Taiwan's Breakfast Soy Procurement Association is seeking a 40,000-60,000-tonne soy cargo from the US or South America in a tender that closes Thursday (Sep 13). The association is seeking the cargo for shipment in the April 26-May 10 period, traders said.

 

Earlier this month, the association didn't make any purchases in soy tender for December-January shipment because prices were above US$700/tonne. Instead, association members separately bought thousands of containerised shipments that were around US$20/tonne cheaper due to lower freight costs.

 

Japan's agriculture ministry Wednesday (Sep 19) issued a simultaneous-buy-and-sell (SBS) tender seeking 120,000 tonnes of feed wheat and 200,000 tonnes of feed barley for bulk shipment by December 31, an official from the Ministry of Agriculture, Forestry and Fisheries said. The tender closes September 26, the official said.

 

In a separate SBS tender Wednesday (Sep 19), Japan bought 51,890 tonnes of feed wheat and 36,555 tonnes of feed barley, also for shipment by December 31.