January 17, 2023

Feed buyers in South Korea purchase more wheat

Feed buyers in South Korea purchased four cargoes of up to 250,000 metric tonnes Australian feed wheat, fuelling talks that corn substitution may have begun due to high US prices and tight global supplies until June, Hellenic Shipping News reported.

According to market sources, Major Feedmill Group and Feed Leaders Committee expanded their coverage of Australian feed wheat during the week, with a price range of US$344–346/metric tonne CFR inclusive of second port charge for May shipment.

South Korean buyers typically don't make up for corn deliveries in June until at least February, but a lack of corn in the first half of the year has started to force feed wheat substitution. For June arrivals in South Korea, indicative offers for corn were seen at US$345/metric tonne and higher than for wheat.

S&P Global Commodity Insights estimates that South Korea will purchase 32 feed wheat cargoes totalling 1.90 million metric tonnes in 2022 at an average cost of US$356.36 per metric tonne CFR.

A South Korean trader said MFG is purchasing two more cargoes of feed wheat than usual for Q2 arrivals, adding that South Korean feed buyers may be  switching from corn. Another trader from Singapore noted that the traded price was less expensive than corn if it were to arrive in June.

Due to the tight supply, a firm US corn basis, strong domestic demand, and a pessimistic production outlook for Argentina, it is anticipated that Asian corn fundamentals will be impacted. A bumper Brazilian crop could ease the supply situation, but its exports won't reach the market until at least late May.

Another trader said the world is betting on a big Brazilian Safrinha crop.

The latest World Agricultural Supply and Demand Estimates report from the US Department of Agriculture reduced projections for corn production in the US, Brazil, and Argentina by nearly 10 million metric tonnes. Exports out of the US and Argentina for 2022-23 were also cut almost 7 million metric tonnes.

-      Hellenic Shipping News