March 5, 2011

Japan turns to Brazil's corn

Japan has bought three cargoes of Brazilian feed corn totalling 150,000 tonnes for shipment in August, trading executives said Friday (Mar 4).

Japan is the world's largest corn importer and purchases the bulk of its requirements from the US, but rising prices have prompted it to turn to cheaper origins.

Traders did not mention the price of the latest purchase but said Brazilian corn for August shipment to Japan was being offered around US$350/tonne, basis cost and freight compared with US$365-$370, c&f for US corn.

US corn offers for August are very high due to the tail-end of the marketing season there and supplies are already tight, said an importer in Japan. Its July shipments are available around US$355/tonne, c&f.

Traders said Japan may buy more Brazilian corn this month, but noted that there are logistical constraints in arranging grain for a large Panamax cargo of 50,000 tonnes or more.

They said Japan has covered less than 5% of its July-September needs and that importers are hoping prices will correct more after having fallen in the last two weeks.

"Buyers are more focused to cover their needs for April-June quarter," said an executive at a global trading company.

More than 70% of the April-June import needs has been covered so far, according to traders. Brazil is the world's third-largest exporter after the US and Argentina.

Last week, the International Grains Council raised its forecast for Brazil's exports in the year to June by one million tonnes to 11 million tonnes. IGC also raised the country's output forecast by 3.4% to 54.5 million tonnes, which is still lower than the estimated production of 56 million tonnes in 2009-10.