October 31, 2005

 

Asia Corn Outlook: Premiums to see little change

  

 

With ocean freight rates most likely to stay at current levels in the week ahead, premiums of corn and wheat delivered to Asia are expected to see little change, trade participants said Monday.

 

Spot ocean freight rates for panamax-size dry bulk carriers fell in the middle of last week to US$46 per metric tonne, on the benchmark route from the U.S. Gulf to Japan. They bounced back to US$48-US$48.50/tonne Friday, and have since stabilized, traders said.

 

"Buyers in Asia these days are reluctant to fix freight rates above US$50/tonne (for panamax-size carriers running on the route from the U.S. Gulf to Japan). Given that demand and supply are quite balanced for the moment, we don't expect to see big changes in spot freight rates (in the next week)," said a Tokyo-based grains trader.

 

Meanwhile, grains futures traded on the Chicago Board of Trade have slipped to new contract lows last week on a confluence of continued bird flu scare jitters, a large new crop supply and slow export sales, traders said. December corn settled 3/4 cent lower Friday at US$1.97 per bushel.

 

Despite stable premiums, "buyers expect to see CBOT corn futures further weaken in the coming week, bringing down overall prices they will have to pay," said a Seoul-based trader.

 

Last week, South Korean buyers bought several corn cargoes in public tenders and private negotiations.

 

Major Feedmill Group bought 52,500 tonnes of U.S. No. 3 corn from Cargill Oct. 25 in private negotiations. MFG bought one cargo at US$141.90/MT, cost and freight to be shipped to the ports of Kunsan and Busan Jan. 10.

 

Korea Feed Association in Seoul bought 55,000 tonnes of U.S. No. 3 corn from Cargill Friday. It bought the corn at US$140.40/tonne, C&F to Incheon port Jan. 15.

 

"I think more buyers are eyeing optional-origin corn this week, if suppliers are able to offer optional-origin corn at US$1-US$2/tonne lower (compared with straight U.S. corn)," said the South Korean trader.

 

Because the Canadian feed wheat price is on par with the Chinese corn price on a C&F basis, traders said buyers in North Asia aren't in a hurry to buy feed wheat.

 

Some buyers have inquired about new crop European feed wheat, especially from Ukraine, but so far, no deal has been noted, traders said.

 

In Japan, corn buyers have begun negotiating for January-March shipments, with mostly U.S. corn suppliers.

 

U.S. corn was quoted Monday at 165 cents per bushel over the CBOT March contract, C&F to Japan from the U.S. Gulf in January for one discharging port, traders said.