February 17, 2011

 

Philippines signs feed wheat, soymeal deals on food stock concern

 

 

As rising prices and shrinking grain supplies prompt Asian buyers to secure food supplies, the Philippines signed one of its biggest soymeal import deals in several years, bought cargoes of Australian feed wheat.

 

Manila's import deals come as fears of tightening world corn, soy and wheat supplies trigger a scramble among buyers from North Africa to the Middle East and Asia to boost reserves.

 

The nation signed deals to buy 240,000 tonnes of the feed ingredient from South America last week for shipment between April and August, said on the sidelines of a global grains trade summit in Singapore.

 

It also bought 200,000 tonnes of Australian feed wheat for shipment between April and June as forecasts of tightest US corn supplies in decades force buyers to seek alternatives such as feed wheat. Traders said buyers from the Philippines are in the market for additional 55,000 tonnes of feed wheat for July.

 

The benchmark US corn rose to its highest since 2008 this week, while wheat and soy have climbed to around 2-1/2 year highs in the past few weeks.

 

Global food prices have reached "dangerous levels", World Bank chief Robert Zoellick said on Tuesday (Feb 15), warning that their impact could complicate fragile political and social conditions in the Middle East and Central Asia.

 

"They bought six cargoes in a single deal, it was a pretty huge order and we expect other importers in the region to make similar moves," said a senior trader with an international trading company in Singapore, referring to the soymeal import deal.

 

The contract was signed at an average price of US$475 a tonne, including cost and freight.

 

Soymeal, corn and feed wheat are used to make feed for pigs, chicken and fish.

 

Manila has locked in supplies of feed wheat to meet demand right up to the middle of the year, with the purchase of at least 200,000 tonnes of Australian grains at US$285-$315 a tonne, C&F.

 

Traders at the conference, being organised by Singapore-based Centre for Management Technology, talked about deals of up to 400,000 tonnes, but additional buys could not be confirmed.

 

The supply of rain-damaged feed wheat from Australia has come as a blessing for global buyers facing a shortfall in corn supply, estimated to be tightest since the Great Depression in the US.

 

Australian feed wheat supply is unusually large this year after rains and floods damaged crops. Around half of Australia's 2011 crop of 22 million to 26 million tonnes is likely to be downgraded to feed grade, much more than the four million tonnes of feed wheat a year it typically produces for domestic consumption.

 

Chinese buyers were among the first to buy it-purchasing about 150,000 tonnes of Australian feed wheat last month. International traders based in Australia have snapped up to two million tonnes of the grain on expectations that demand from animal feed makers would surge as global supplies shrink.