October 18, 2012
"Japanese buyers are not very bullish, so they are taking time to consider before buying, even though supply will be a little bit tighter," said Nobuyuki Chino, Tokyo-based president of Continental Rice Corp. Wednesday (Oct.17). Japan is the world's top corn importer.
Chino said that US corn prices are likely to remain at around US$7 a bushel until the end of the year, a level that is simply still too expensive for buyers. By holding out, buyers hope that the lull in demand would send prices down.
A senior company official at South Korea's largest animal feed miller, Nonghyup Feed Inc. concurred, "We are always waiting for lower prices and are waiting for an opportunity to buy at even better prices."
The official said that the company prefers to wait out the recent decline in corn prices as Nofi has already covered requirements up till February 2013, so it still has time to shop around.
Nofi has not decided when it will issue a fresh tender after it cancelled one last Friday (Oct.12) due to high futures prices.
On Tuesday (Oct.16), December corn futures on the Chicago Board of Trade rose US$0.01, or 0.1%, to S$7.38 1/4 a bushel after sharp declines in the previous two sessions. The grain has been pressured in recent weeks by concerns that high prices--which soared to a nominal all-time record of US$8.43 3/4 a bushel in August--have substantially cut into corn demand from foreign buyers, ethanol producers and livestock farmers.
Still, corn's losses are limited as the USDA cut its forecasts for this crop year's corn harvest and for inventories of the grain on Thursday (Oct 17). US is the world's top corn exporter.
Furthermore, despite concerns about high prices, some buyers in Asia have started purchasing corn for shipment next year. Compound animal feed manufacturers in Japan have bought at least 250,000 tonnes of US and South American corn for shipment in the January-March period, trading executives said late Tuesday (Oct.16). Chino in Tokyo said most of the grain sold is for shipment in January.
There is also demand from other industries. Global conglomerate Coca-Cola Co., for one, is using more corn-based sweeteners in its products, a senior company executive said Tuesday (Oct.16).
"In most Coca-Cola products, there is a clear direction of shift toward use of high fructose corn syrup, which is cheaper than sugar," Michael Ferrari, director of global agricultural commodity risk management at the beverage giant told Dow Jones Newswires on the side lines of an agriculture conference here.