February 23, 2012

Japan imports corn from US after late Ukrainian delivery

After a delay in Ukrainian shipments this quarter, Japan has bought 1.8 million tonnes of feed-grade corn for April-June shipment from US, the world's top exporter, trading executives said Wednesday (Feb 22).

The country is the world's top importer, buying around 3.3 million tonnes of feed grade corn alone every quarter.

"It covered more than 45% of its January-March needs with European buys, but the bulk of its purchases for April-June have been from the US," an executive said on the sidelines of a grain conference.

Japanese compound feed manufacturers have purchased US corn, basis cost and freight, for the next quarter at about US$2.03 over the May and July futures contract on the Chicago Board of Trade. Corn from Ukraine and Argentina is being offered around US$1.75 and US$2.00 over CBOT May futures.

Japan buys corn at a premium to CBOT futures and locks in the final price at any date of its choosing.

So far, final pricing hasn't been done for most of the cargoes purchased as buyers expect CBOT futures to fall in the next few months in anticipation of record plantings in top producer US

Earlier, Japan purchased a few spilt cargoes of Argentinean corn and sorghum to cut costs but stopped purchases after prices rose on the back of dry weather in South America and as the gap with US offers narrowed.

The country is yet to cover 250,000 tonnes of its March requirements, which may also come from the US

Final pricing of around 50% of March shipments is complete, mostly done at a cost-and-freight premium of US$1.95-US$2.05, done at an average CBOT March contract price of US$6.50 a bushel.

January and February purchases were cheaper, with the premium locked in at average futures prices of US$6.10 and US$6.20 a bushel.