February 20, 2012

 

Indonesia buys less corn amid domestic harvest

Indonesia's corn imports slowed this week as its domestic harvest picked up, while India sold 20,000 tonnes of corn to Vietnam and Malaysia for March-April shipment.

 

Even as most Asian importers stayed on the sidelines due to higher global prices, traders said Malaysia was likely to be seeking some 120,000 tonnes of corn for April arrival within the next couple of weeks.

 

"Chicago prices went up and as a result buyers have been reluctant to sign new deals," said one Singapore-based trader. "It means some have a strong conviction that the market will break down to lower levels."

 

The benchmark US corn futures rose 1% this week and soy gained nearly 3%, with both contracts rising for four out of the past five weeks, driven largely by concerns over lower output from drought-stricken Brazil and Argentina.

 

In Asia's physical market, new-crop Argentine corn was quoted at around US$315 a tonne, including cost and freight (C&F), for April delivery, largely unchanged from last week but higher than around US$300 a tonne offered about a month ago.

 

Indian corn was priced between US$295 and US$300 a tonne, C&F, to Southeast Asia with traders reporting some 20,000 tonnes sold in containers to Malaysia and Vietnam.

 

"Indian has done some business in containers to Southeast Asia, but largely it has been very quiet," said another Singapore-based trader with an international trading company. "But we expect Malaysia to be back in the market soon as they have not covered much for April."

 

Malaysia is likely to seek 120,000 tonnes, or two panamax vessels, which are likely to come from South America.

 

Indonesian corn importers were on the sidelines with the arrival of domestic supplies, while in Vietnam and Thailand, the harvesting of tapioca, which is used instead of corn, kept buyers away.

 

"Indonesian new corn crop is coming in and tapioca production in Vietnam and Thailand is competing with the imported corn," he said. "Tapioca is costing Vietnamese mills US$210 to replace corn; it saves a lot of money."

 

Australian prime hard wheat was quoted at around US$415 a tonne, C&F, into Southeast Asia this week, while Australian prime wheat was offered at US$325 a tonne and Australia standard wheat at US$310 a tonne.

 

US soft white wheat was quoted near US$315 a tonne, hard red winter wheat offered close to US$330 a tonne and northern spring wheat at US$405 a tonne.

 

The Taiwan Flour Millers' Association purchased 85,050 tonnes of US-origin wheat in a tender on Thursday. The tender had sought delivery within March 21 - April 21 in two consignments.