May 21, 2012
Japan expects lower corn prices on favourable growing condition
Due to favourable growing conditions for the next US crop, buyers in Japan are expecting corn prices to fall, with the North Asian country having covered just 25% of its feed-corn needs for July-September shipments, according to trading executives and importers in Japan.
More than half of Japan's purchases for the period have been from South America, and importers are hesitant to buy because they feel corn is overpriced, a Tokyo-based importer said.
Japan is the world's top importer by volume, purchasing around 3.3 million tonnes of feed-grade corn each quarter. The July contract's high premium over September and December has made it difficult to decide on the timing of purchases, he said.
The US, the world's top exporter, is heading toward a record crop that will ease global supply tightness that has prevailed for more than 18 months. With more than 90% of US corn already planted, an early harvest will also weigh on prices.
Early this week, corn for July shipment was offered at a premium of US$2.15 a bushel to the Chicago Board of Trade's July contract. Offers for shipment in the first and second half of August were at premiums of US$2.62 and US$2.45 to CBOT September, respectively.
The corresponding premiums for September shipment were US$2.13 and US$2.02, respectively. On Thursday, CBOT July corn futures settled US$0.05 higher at US$6.25 a bushel.
"The premiums are too far apart and so are the prices for making any purchase decision," a Singapore-based executive with a global commodities trading company said.
Most importers expect CBOT December corn to fall to US$4.80 a bushel by early August. Meanwhile, Japanese compound feed manufacturers have bought 500,000 tonnes of South American corn for July-September shipment, and purchases of an equivalent volume are in the pipeline, trading executives said Friday (May 18).
Earlier this week, Brazilian feed corn was US$22/tonne, US$24/tonne and US$5/tonne cheaper than the US origin, on a delivered basis at Japanese ports, for July, August and September shipment respectively, a Tokyo-based importer said. Another 500,000 tonnes for July-September shipment will likely be bought from Brazil because Argentinean grain is harder to process into corn flakes, traders said.
South Korea's Feed Leaders Committee has purchased 60,000 tonnes of optional-origin feed grade corn from Marubeni Corp. at US$259.50/tonne, basis cost and freight, for arrival by end-December, trading executives said Wednesday. This is the lowest price South Korean feed millers have paid for corn in more than a year.