November 28, 2007

 

Asia Grain Outlook on Wednesday: Wheat may rise; S Korea companies delay corn buys

 

 

Wheat prices are likely to rise further as bulls at the Chicago Board of Trade continue to feed off India's succession of wheat import tenders.

 

After India's state-run MMTC Ltd. (513377.BY) bought 342,000 metric tonnes of wheat earlier this month, another state-run company PEC Ltd. Monday sought around 350,000 tonnes of wheat in a tender.

 

While India doesn't usually buy U.S. wheat since it doesn't meet Indian specifications, such large import tenders coming at a time when global stocks are tight support bulls in wheat markets globally.

 

Meantime, South Korean corn buyers aren't yet placing orders for May corn cargoes, because they expect freight costs and corn prices to slide further in coming months.

 

For soymeal, however, South Korean buyers are already placing orders for South American soymeal for May shipment, while most buyers have almost finished placing their orders for December-April shipment Indian soymeal.

 

A South Korean buyer said major feed buying groups may just buy another 100,000 tonnes of Indian soymeal to fulfill their needs up to April.

 

Indian soymeal dominates the Asian soymeal market in the December-March period, when soymeal from India's soybean crop harvested in October and November arrive on the market. After April, however, South America's soymeal volumes usually soar, making it more price competitive.

 

For May shipment to South Korea, South American soymeal costs US$414/tonne on a cost and freight basis, while Indian soymeal costs around US$440/tonne, C&F.

 

However, some buyers are concerned that Indian soymeal may face delays in getting to South Korean ports after the first shipment arrives in December, as rapeseed meal deliveries from India have been delayed over the past several weeks due to a shipping crunch globally.

 

In deals this week, Japan's Ministry of Agriculture is scheduled to Thursday seek 8,000 tonnes of wheat in a simultaneous buy-sell, or SBS, tender for delivery up to Jan. 31. In SBS tenders, bids with the highest markup - or difference between the price that the ministry will pay and the price that the ministry will receive - get preference.