Due to strong demand in the physical market and bad weather in South America, Asian grain prices are likely to move higher this week, trade participants said Monday (Jan 23).

 

They said South Korea's recent purchases of more than one million tonnes of feed grains and anticipated demand from Japan and Vietnam are pushing up prices.

 

South Korea's feed millers have been very active in recent weeks, and Japanese compound feed manufacturers, who have been less active, may accelerate buying anytime now, Nobuyuki Chino, president of grains trading company Continental, said by telephone from Tokyo.

 

Buyers in South Korea, one the world's biggest importers of feed grains, have purchased eight cargoes of corn and wheat totalling 455,000 tonnes over the past five days, raising their total purchases since January 6 to just above one million tonnes.

 

Near-month wheat and corn futures on the Chicago Board of Trade last week touched one-month lows below the key psychological level of US$6 a bushel, after speculators dumped long positions following a USDA report on January 12 that projected larger-than-expected inventories, particularly in corn. But prices have rallied in the past few sessions after the USDA confirmed strong sales to South Korea and Mexico.

 

South Korean feed millers have covered their requirements for wheat, corn and soymeal through April and will seek feed grains for May-July shipment as soon as prices fall again, an importer in Seoul said.

 

Traders said the prices of wheat, corn and soy may rise by about US$0.10 a bushel in the next few days as Japan, the world's biggest importer, seeks corn for shipment in March amid concern that hot, dry weather in Brazil and Argentina, major global producers, will reduce output.

 

The market continues to trade on South American weather, and rains last weekend are not expected to significantly benefit the corn crop there, ANZ Banking Group said in a research note.

 

Near-month wheat, corn and soy futures on CBOT are trading around US$6.16, US$6.18 and US$12 a bushel.

 

Traders now expect speculative longs to build up gradually again unless there is bountiful rain in South America.

 

In the cash market, demand for US grains may increase if port congestion persists in Ukraine and the harvest is delayed in Brazil, Karl Setzer, an Iowa-based analyst with MaxYield Cooperative, said.