May 28, 2012

 

Asia grain demand up on reduced prices

 

 

Favourable weather in the major growing regions is expected to bring about a buying spree in the next few weeks by Asia's grain importers as prices fall, trading executives said.

 

The supply of corn and soy will remain tight until the next US harvest in September but many buyers are already looking for cargoes that will arrive in the last quarter, they said.

 

Buyers are inquiring about soymeal, corn and feed wheat from South Korea for arrival in the fourth quarter and a few deals are likely, an importer in Seoul said.

 

The November soy futures contract on the Chicago Board of Trade is trading at a discount of more than a US$1/bushel to the July contract.

 

The CBOT December corn contract is at a discount of 66 cents/bushel to July.

 

The November and December contracts represent the new US soy and corn crops that are now being planted. They will be available for export in the last quarter.

 

Even for July-August shipment, importers are making purchases benchmarked to the CBOT away-months contracts.

 

The Taichung branch of Taiwan's Breakfast Soybean Procurement Association Friday (May 25) purchased two cargoes totalling 115,000 tonnes of Brazilian soy.

 

It bought 60,000 tonnes for Aug. 1-15 shipment from Cargill at premium of US$3.05 a bushel to the November contract on CBOT, basis cost and freight, traders said.

 

It purchased another 55,000 tonnes from Itochu for Sept. 6-20 shipment at a US$2.92 premium, C&F, they said.

 

BSPA-T's last purchase May 8 was at a premium of US$3.2521, C&F. The CBOT November contract was then trading around US$13.5975. However, prices and premiums have declined since then. The contract is now trading around US$12.81.

 

The Kaohsiung branch of BSPA bought Brazilian soy this week at premiums of US$3.07 and US$3.133, C&F, for July 21-Aug. 4 and Aug. 15-29 shipment.

 

In the corn market, buyers are actively seeking South American and Indian cargoes. Early this week, Brazilian corn was offered around US$282/tonne, C&F, Southeast Asia, for November-December shipment.

 

For those buyers who need to fulfill immediate needs, Indian origin is among the cheapest.

 

Vietnamese feedmiller Proconco has purchased a cargo of 10,000 tonnes around US$258/tonne, C&F, for July 15-Aug. 15 shipment to Hai Phong port from Emmsons International, traders said.

 

It also bought two cargoes of 15,000 tonnes each around US$253/tonne, C&F, for July and July 15-Aug. 15 shipment to Ho Chi Minh City from Marubeni and Crossland, they said.