March 27, 2006

 

Asia Corn Outlook: Premiums seen mixed; US futures

  

 

Premiums of wheat and corn delivered to Asia are likely to remain mixed in the week ahead, as U.S. corn futures are expected to rise while wheat futures may closely track weather developments for the U.S. wheat crop.

 

While U.S. corn futures ended mostly lower last week, traders said China's continued absence from the corn export market is improving U.S. corn exports and will likely support corn futures.

 

Wheat futures were mixed in the past week, with weather for the U.S. wheat crop expected to remain key to price movements in the short term.

 

Demand for wheat has been subdued in Asia with one U.S. analyst saying most Asian buyers are only importing low-priced feed wheat, putting off their purchase of food wheat till the new U.S. wheat crop hits the market.

 

South Korea had two small-sized import deals for food wheat last week. While four South Korean flour mills jointly bought 14,500 tonnes of U.S. No.1 wheat from Toepfer, three other mills bought 9,200 tonnes of U.S. wheat.

 

Japan's Ministry of Agriculture, Forestry and Fisheries is unlikely to hold their weekly wheat tender in the current week, and may resume wheat import tenders from the first week of April.

 

Meantime, South Korean feed companies continued to enthusiastically buy corn this week, with some buying also coming in from Taiwan.

 

The premium for corn delivered from the U.S. to Taiwan is currently around 109 cents a bushel above the Chicago Board of Trade July contract for May shipment.

 

Among the major deals, Korea Feed Association bought a total of 275,000 tonnes of U.S. corn in two separate tenders last week, while Taiwan's Member Feed Industry Group bought 60,000 tonnes of U.S. corn.

 

"South Korean feed companies may keep up their corn buying in the week ahead, as they expect prices of corn to go up in the future," said a trader in Seoul.

 

The trader said that as China hasn't renewed its corn export quota, which expired Feb. 28, the U.S. is the only major corn exporter in the market.

 

"There is increased demand for corn since feed wheat is more expensive than corn," added the trader.

 

This week, Taiwan Sugar Corp is expected to buy 23,000 tonnes of corn in a tender to be concluded March 31.

 

In other news, China's wheat imports slumped 99.4% on year to 2,303 tonnes in February, according to the General Administration of Customs, which didn't give any reasons for the change.

 

In January-to-February, wheat imports totaled 47,276 tonnes, down 96.1% on year.

 

Indonesia's National Corn Council has targeted to reach corn self-sufficiency by 2007, said Indonesian news agency Antara.

 

"We wish that we can stop corn import in 2007 if we could increase production in Indonesia," the council's chairman Fadel Muhammad said.

 

Indonesia's corn imports declined to 400,000 tonnes in 2005 from around 1.5 million-2 million tonnes in 2003, Antara said.

 

Meantime, India's federal government is confident the wheat crop being currently harvested won't fall short of the targeted 73 million tonnes despite recent untimely rains which, experts feel, could have affected the standing crop.

 

"There is no problem about wheat output. We have looked at the situation. In fact, the harvesting has started in Madhya Pradesh and it would be undertaken from the middle of April in Punjab and Haryana," news agency Press Trust of India quoted Agriculture Minister Sharad Pawar as saying.

 

Madhya Pradesh, Punjab and Haryana are the three major wheat producing provinces in India.

 

India harvested 72 million tonnes of wheat in 2005.