May 29, 2006

 

Asia Corn Outlook: Premiums may rise on CBOT

 

  

Premiums for corn and wheat delivered to Asia may rise in the week ahead on strong demand for corn and adverse conditions for the wheat crop in the U.S.

 

Demand for U.S. corn was strong throughout last week and the continued absence of China from the corn export market has been pushing up U.S. exports.

 

In addition, an online analysis on CBOT's Web site said at least one corn-sweetening plant in China is likely to import 50,000 metric tonnes of U.S.-origin corn

 

CBOT's analysis said the bullish tone for corn market is being supported by China's likely emergence as a corn importer after being a significant corn exporter in 2005.

 

In wheat, weather conditions continue to be worrying for the U.S. crop.

 

In Asia, drought conditions in Western China may have damaged the wheat crop there, though impact on national wheat prices may not have been significant as the wheat crop in rest of the country has been progressing satisfactorily.

 

In corn, a trader in Seoul said there may be continued demand for feed corn from South Korean buyers.

 

The trader said Nonghyup Feed Inc and Korea Corn Processors Association may each buy up to 110,000 tonnes of corn in tender this week, possibly for July-August shipment.

 

Traders, however, say the healthy corn demand in South Korea over the past several weeks is nothing out of the ordinary and the country's total corn imports in 2006 is likely to remain at the same level as the last few years of about 6 million tonnes.

 

South Korea, however, hasn't bought much feed wheat lately since corn prices are cheaper.

 

Traders said one feed buying group may have bought 55,000 tonnes of feed wheat last wheat, though they couldn't provide any further details.

 

Over the last week, there have been quite a few import deals in corn from South Korea and Taiwan buyers, while one import deal in wheat from Japan.

 

In Taiwan, premium for corn delivered from U.S. is US$1 above the CBOT September contract.

 

Taiwan Sugar Corp. bought 23,000 metric tonnes of U.S.-origin corn from trading house Agrex in a tender concluded last week.

 

Taiwan's Members Feed Industry Group, or MFIG, bought 60,000 metric tonnes of U.S.-origin corn from Cargill in a tender concluded last week.

 

South Korea's Major Feedmill Group, or MFG, bought 55,000 metric tonnes of U.S.-origin corn from Cargill in a tender concluded last week.

 

In wheat, Japan's Ministry of Agriculture, Forestry and Fisheries bought a total of 151,000 metric tonnes of U.S., Canada and Australian wheat for July 1-30 shipment in a tender concluded on Thursday.

 

In other news, India's junior food minister Akhilesh Prasad Singh said last week that only two of eight bidders for India's 3-million-tonne wheat import tender have met the tender conditions.

 

The two companies, AWB Ltd and Agrico Trade SA could supply 1.7 million tonnes of wheat, if the state-run State Trading Corporation awards them the tender over the next few days.

 

The Indian government may later float a tender to import 1.3 million tonnes of additional wheat.