November 28, 2005

 

Asia Corn Outlook: Premiums likely unchange; low demand

  

 

Premiums for wheat and corn delivered to Asia are likely to hover around last week's levels this week, as demand is expected to remain low from major producers such as Taiwan and South Korea.

 

In addition, analysts said U.S. corn and wheat futures are likely to remained rangebound for the next few weeks amid a lack of encouraging fundamental news.

 

Last week, U.S. wheat markets were disappointed as it became clear that India won't import wheat anytime soon, putting an end to such speculation.

 

But S Nagarajan, a prominent Indian agricultural scientist, has said if India doesn't increase its wheat production by 2.5 million metric tonne s annually from 2006, it could face a major shortage by 2020, India's Sify.com Web site reported last week.

 

He added that India's wheat production has been stagnating for the last five years.

 

Meanwhile, Asian premiums for wheat and corn may also remain pressured because of steadily declining spot ocean freight rates.

 

A Seoul-based corn trader said spot ocean freight for panamax-sized cargoes from the U.S. Gulf to South Korea was currently around US$42-US$43/tonne , from around US$45-US$46/tonne  7-10 days ago.

 

The trader added that demand for corn in South Korea is expected to be low in the next few weeks, as most traders have covered their needs up to February.

 

However, he added that concern over bird flu hasn't had much impact on South Korea's feed demand.

 

In Taiwan, however, a trader said such concern was keeping local demand lower than usual. He added that most Taiwanese traders were covered until January for corn.

 

But the trader said wheat demand may rise in the next few weeks in Taiwan as traders start negotiating with suppliers for end-December wheat shipments.

 

Meanwhile, Taiwan Sugar Corp. is expected to conclude a tender for 23,000 tonne s of corn from the U.S. Pacific Northwest Nov. 29, said another trader.

 

The expected delivery date for the shipment is Jan. 7-Jan. 24.

  

Ample Wheat Stocks In Pakistan

  

Pakistani news channel GEO TV quoted the country's Federal Commissioner for Agricultural Development, Qadir Baksh Baloch, as saying there was no possibility of a wheat shortage in Pakistan, as around 500,000 tonne s of wheat stocks are currently available.

 

But Pakistan's farmers are quite livid with the country's irrigation department over the irregular supply of water, which they say is delaying the sowing of the wheat crop, a charge the department denies.

 

Pakistan's Daily Times last week quoted Muhammad Sultan, president of the Chamber of Agriculture, as saying that irregular water supply is causing concerns for wheat sowing, and further delays may cause wheat production in the country to fall by as much as 2 million tonne s.

 

Pakistan's wheat crop, which is being currently sown, will be harvested in early 2006.

 

In major deals last week, Philippine feed millers bought 44,000 tonne s of wheat from China at US$143.50 a tonne , cost and freight basis, for arrival in February.

 

According to officials, the country's feed millers have so far imported more than half a million tonne s of wheat this year.

 

The Seoul-based Korea Feed Association bought 105,000 tonne s of U.S. No. 3 grade corn from trading houses Cargill and Mitsubishi last week.

 

KFA Seoul bought two 52,500-tonne  cargoes of U.S. corn to be shipped between March 15 and March 30 to the port of Incheon. Cargill will supply the first cargo at US$133.38/tonne , while Mitsubishi will supply the second cargo at US$132.94/tonne , both after cost and freight.