May 21, 2007

Israel group purchases corn, soymeal from Argentina

A group of private buyers from Israel has bought 50,000 tonnes of corn and about 8,000 tonnes of soymeal from Argentina via a tender which closed on Thursday (May 17), European traders said on Friday.

The consortium sought up to 56,000 tonnes of corn and up to 14,000 tonnes of soymeal from the United States or South America for shipment between June 20 and July 10.

The corn was said to have been bought at 181 cents cargo and freight (C&F) above Chicago's July contract, a major increase since the last large Israeli corn purchase of 50,000 tonnes C&F on February 8 worth 120 cents above the nearby Chicago contract.

Since that purchase, international ocean shipping costs have risen dramatically.

The Baltic Exchange's Panamax freight index for bulk carriers to transport grains and metal ores closed at 6,220 points on Thursday, up from around 4,000 points in early February 2007 and above its previous all-time high of 6,110 points in 2004.

A trader said Israeli buyers are being very careful about shipping costs and the exact combination of corn and soymeal volume is uncertain but the purchase is designed for a Panamax shipload.

The trader added Argentine corn currently appears to be much more competitive than supplies from the US.

The soymeal was bought at US$41 a short tonne over Chicago's July contract, a price regarded as very low.

A trader said the price is a "giveaway wherein somebody tries to break into the Israeli market."