March 13, 2006

 

Asia Corn Outlook: Premiums may rise on Asian demand

 

 

Premiums of wheat and corn delivered to Asia may rise in the week ahead on expectations of strong Asian demand and weather concerns for the U.S. wheat crop.

 

Both wheat and corn futures in the U.S. ended higher Friday. Wheat futures, especially, rose on weather concerns in the U.S. Central Plains.

 

For corn, the continued absence of China from the export market has seen more demand from other major Asian buyers such as South Korea and Japan.

 

A trader in Seoul said major South Korean corn buyers, such as Nonghyup Feed Inc., or NOFI, Major Feedmills Group, or MFG, and Korea Feed Association, or KFA, may float tenders for purchase of corn over the week.

 

At present, premiums for corn delivered from the U.S. Gulf to South Korea are at 138 cents a metric tonne above the May Chicago Board of Trade contract.

 

Traders said that while KFA and MFG are likely to seek corn for end-June shipment, NOFI may seek corn for delivery at the end of May.

 

Further, traders said no corn importer in Asia is at present holding back on their imports, not waiting for China to return as a corn exporter.

 

China didn't reissue corn export quotas after they expired last month. The Chinese government hasn't indicated any fresh date for renewing export quotas.

 

Meantime, domestic prices of corn continue to rise in China as processors are very bullish on prices.

 

While Chinese farmers are actively liquidating their corn stocks to earn cash ahead of the spring seeding season, processors have proven to be keen buyers.

 

Japan's Ministry of Agriculture, Forestry and Fisheries bought 160,000 tonnes of wheat for May 1-31 shipment in a tender last week.

 

Also last week, Taiwan Flour Millers' Association bought 80,240 tonnes of U.S.-origin wheat from trading house Columbia Grains in a tender.

 

Taiwan's Members Feed Industry Group, or MFIG, bought 60,000 tonnes of U.S.-origin corn from trading house Cargill in a tender.

 

In other news, India's Agriculture Minister Sharad Pawar has said a decision on whether further imports of wheat are required is likely to be taken by May.

 

"I think that the rains in the last few days in (India's major wheat-growing province) Punjab would have improved the wheat supply situation. We have enough stocks for consumption purposes, but there is no buffer stock to meet contingency needs," Pawar said.

 

India has already awarded a tender to import 500,000 tonnes of wheat from Australia's AWB. The first consignment of wheat is likely to arrive in India this month.

 

According to the government's latest estimates, India's wheat crop, harvesting for which has just begun, is likely to be 73.1 million tonnes, compared with 72 million tonnes last year.

 

Recent rains in wheat-growing areas of Northern India are likely to provide much-needed moisture for the country's wheat crop.

 

Meantime, in Pakistan, the country's largest wheat growing province of Punjab has asked the federal government's permission to export 500,000 tonnes of wheat, said the Daily Times newspaper.

 

The federal government will, however, assess if enough wheat will be available for domestic consumption before approving exports.

 

Pakistan's wheat crop, currently being harvested, is expected to be a bumper one, at 22 million tonnes compared with 21.5 million tonnes in 2005.