May 3, 2012

Taiwan's wheat import price drops on US sowings

The Taiwan Flour Millers' Association bought Wednesday (May 2) 56,500 tonnes of US wheat from Columbia Grain International for June 10-24 delivery, trading executives said.

The association's import prices for high-quality milling wheat are widely considered a benchmark in the Asian grain trade, even though it buys relatively small volumes.

The association bought 25,500 tonnes of Dark Northern Spring grade with 14.5% protein, 17,250 tonnes of Hard Red Winter grade with 13% protein and 13,750 tonnes of Western White grade with 9% protein at US$382.45/tonne, US$347.73/tonne and US$301.07/tonne, respectively, cost and freight, they said.

The freight cost has fallen 9.6% to US$32.85/tonne from US$36.32/tonne in the April 19 tender due to a decline in dry bulk transportation rates in the region.

The free-on-board prices are little changed from an April 19 purchase of Hard Red Winter wheat and April 5 purchase of Western White wheat by the association but have declined 3% for Dark Northern Spring wheat to US$349.60/tonne, in tandem with global prices amid a positive outlook in the US for the next crop to be harvested in September.

The near-month Hard Red Winter wheat contract on the Kansas City Board of Trade is trading around US$6.45 a bushel, up from US$6.26, and Minneapolis Grain Exchange spring wheat futures are at US$7.67, down from US$8.00 around the time of the April 19 tender.

Spring wheat prices have declined recently because of the swift pace of on-going US plantings and positive crop outlook amid favourable weather.

If the weather continues to support spring wheat plantings, it may not only boost output but also increase protein values in wheat, said a Singapore-based trading executive, adding that protein values and output have suffered in recent years.

The US has projected a 30% and 29% decline, respectively in Hard Spring wheat output and exports in the current marketing year ending May 31.