April 10, 2007

 

South Korea may seek corn, wheat; other Asian buyers to slow down
 

 

South Korea may purchase corn and wheat this week but other Asian buyers are likely to hold back after their recent purchases in an attempt to go ahead of high prices.

 

The Korea Corn Processing Industry Association (KOCOPIA) could re-tender for 110,000 tonnes of corn it had passed on last week due to higher-than-expected prices.

 

The KOCOPIA may seek two cargoes of non-GMO corn for July arrival but prices would not be better than the prices last week as Chicago corn futures have rallied again from last week, according to a trader at an international grain house.

 

South Korean flour millers could issue tenders to buy US No. 1 wheat for May and June shipment but prices would be the key, traders said.

 

Wheat and corn futures on the Chicago Board of Trade surged over 5 percent on Monday, the first day of trade following the long weekend vacation, extending rallies from the previous week on cold weather in the United States.

 

In Japan, corn buying for July-September cargoes is slow, as traders take a break from the recent brisk pace at which they have been making purchases.

 

The market activity is expected to be slow for most of the rest of the month.

 

A wide gap between trading firms' selling price and feed makers' buying price is also hampering trade, the trader said.

 

In the soybean market, traders are expected to cover their requirements for May cargoes. They estimated that roughly half to about two-thirds of the May requirements have been covered.

 

Buying tends to progress at a faster pace for May as buyers start to seek more soybeans from South America, which take longer to arrive in Japan than those from the United States, the main supplier to Japan.

 

Japan tends to shift to buying soybeans from Brazil when new crops from the country start to become available in March, drawn by the generally higher protein content of the oilseed.

 

One trader said that there appeared to be less buying of Brazilian soybean this year because of their high price, which is due in part to strong freight rates.

 

Chinese demand for raw materials and congestion at Australian ports have helped lift ocean freight rates for dry commodities.

 

The Baltic Exchange's capesize freight index <.BACI>, an indicator of global minerals demand, topped 8,000 points on Wednesday last week for the first time since December 2004, when it set a record of 8,911.

 

Industry experts said it had the momentum to hit the 2004 all-time high and the upward trend will likely to continue.

 

Weak demand is seen dampening buying interest by Taiwan grain importers this week, with traders saying increased use of containerised shipments to cut high raw material costs was limiting the number of open tenders.

 

So far, no talk of any tenders has been discussed and demand remains slow, according to Taiwan-based international trader.

 

Since last year Taiwan grain importers have been increasingly shipping corn to Taiwan in empty containers that are returning to Asia after being used to deliver cargo to the United States.

 

Costs have been estimated at US$10 to US$20 cheaper than by regular bulk carriers, helping livestock breeders to offset some of the large price increases in corn and soy, key ingredients in animal feed.