February 23, 2012

Freezing temperatures are causing logistical constraints in shipments prompting some buyers to switch to alternative grades which made Asian grain traders to keep their eyes peeled on the weather in the Black Sea region.

Japan, for one, has purchased 1.8 million tonnes of US feed-grade corn for April-June shipment, stepping up purchases from the world's top exporter after a delay in this quarter's shipments from Ukraine, 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.

Demand for US wheat will likely rise in the next few months and may exceed the government's forecast of 26.5 million tonnes for the marketing year ending May 31 due to strong overseas use in animal feed, logistical constraints and lower supplies and higher prices of Black Sea grain, a senior industry analyst said.

Global demand is increasing and a fall in exports from Ukraine and Russia can potentially push up sales of US grain, which is now very competitive, Jay O'Neil, senior agricultural economist, Kansas State University, told Dow Jones Newswires Tuesday.

Some of this shift in demand is already visible, with Egypt, which has mostly bought Russian wheat for several months now, turning to the US for April shipments, he said.

Already, Russian exports of around one million tonnes of agricultural commodities, primarily grains, have been delayed in the past month as freezing temperatures at ports in the south prevented ships from reaching berths, shipping executives and traders said at a grains conference in Singapore Wednesday.

"The figure includes the grain stuck in both shipping vessels which are already loaded and the volume lying in port warehouses," Talibov Said, president of South Sea Port near Azov, said on the sidelines of the conference.

Many ships are unable to reach berths and many exporters are resorting to force majeure, Karina Nor-Arevian, head of South Sea Port's legal department, said.

The weather is expected to improve only after mid-March, when grain-loading operations may resume, Nor-Arevian said.