March 9, 2012

 

 

In anticipation of further price gains due to a drought in South America, South Korean feed millers are scrambling to buy feed grains and have locked in deals to import at least 330,000 tonnes of corn and wheat in just two-to-three days, trading executives said Thursday (Mar 8).

 

The USDA is due to release its monthly report on demand and supply Friday. It may lower its forecasts for inventories of corn and soy because of drought in several parts of Brazil, Argentina and Paraguay, thereby supporting prices.

 

"The price outlook is bullish and importers don't want to be caught on the wrong side of the fence," said an importer in Seoul.

 

South Korea is also buying soymeal, rapeseed meal and palm kernel meal and negotiating more deals for corn in the run-up to the USDA report, he said.

 

South Korea's Feed Leaders' Committee, or FLC, has purchased 55,000 tonnes of optional-origin corn at US$313.96/tonne, on a cost and freight basis, for delivery by June 30, from Hamburg-based trading company Alfred C. Toepfer International GmbH, traders said.

 

They said there is an additional charge of US$1.75/tonne for unloading part of the cargo at a second port.

 

Toepfer has sold two more 55,000-tonne cargoes of corn, one each to the Major Feedmill Group and Busan branch of the Korea Feed Association at US$311.95/tonne, C&F, for delivery at two ports by June 25 and June 15 respectively.

 

The cost of unloading part of the cargoes at the second port is included in the price, the executives said.

 

The Seoul-based Korea Feed Association purchased 55,000 tonnes of optional-origin corn from Bunge Ltd. at US$311.96/tonne, C&F, for delivery at only one port by June 20.

 

Most traders expect European-origin corn to be supplied in the deals. US corn was offered around US$323-324/tonne, C&F for June arrival.

 

Major Feedmill Group has purchased two cargoes totalling 110,000 tonnes of optional-origin feed wheat from Glencore International PLC at US$285.90/tonne, on a cost and freight basis, for arrival by July 20 and July 25, trading executives said Thursday.

Prices are US$4/tonne lower than MFG's last purchase two weeks ago. Traders expect Australian wheat to be supplied in the deal.

 

On February 9, the cost of wheat purchases by South Korean feed millers hit the highest level in more than nine months when MFG bought four cargoes at US$301, US$296.75, US$297.65 and US$298.50 a tonne and the Korea Feed Association bought one cargo at US$299.50/tonne, C&F.

South Korea, one of the world's largest buyers of feed grains, has purchased more than 2.7 million tonnes since January 6, including 1.05 million tonnes of feed wheat and 1.47 million tonnes of corn.