June 5, 2007

 

South Korea, Taiwan and Japan to buy corn amid rising freight rates

 

 

Corn buyers from Taiwan, South Korea and Japan are expected to purchase corn this week, but Chicago futures corn prices and rising freight rates could limit a large volume of purchases, traders said on Monday.

 

Japanese corn buyers are trying to reach their requirements for the third-quarter period after completing more than 70 percent of their quarterly needs last week.

 

Importers from South Korea are likely to purchase corn for arrivals between August and November, while Taiwan grain importers are likely to seek a combined shipment of US corn and soybeans after the failure to secure the cargo via a previous tender.

 

A Seoul-based trader said importers will have a sporadic buying this week as it already bought 220,000 tonnes of corn for the past two weeks through private negotiations as freight rates turned lower.

 

Last week, the Korea Feed Association (KFA) purchased 110,000 tonnes of US corn for November arrival.

 

The group will continue seeking one or two cargoes of corn after it had failed to buy 495,000 tonnes of corn for October and November arrivals due to higher prices in April.

 

Spot voyage fixtures for modern Panamax rates for benchmark US Gulf to Asia routes are estimated at around US$73 per tonne, shipping brokers said.

 

Japanese importers had slowed down purchases of about 2.2 million tonnes of corn by last week against the quarterly requirement of about 3.1 million tonnes due to high Chicago corn future prices and freight rates.

 

A majority of Japanese feedmakers buy corn from the United States, but recent purchases have been from China to fill a quota of some 1.3 million tonnes set by Beijing.

 

Traders said Japan will buy around 30,000 tonnes each month of Chinese corn, but high prices and unsteady supply may restrict purchases beyond September. Japan mainly uses corn for animal feed.

 

China's corn exports to Japan totalled 28,900 tonnes in April more than triple the 8,600 tonnes a year earlier. But this volume only accounted for 3 percent by 882,700 tonnes and the remaining 853,800 tonnes came from the United States.

 

The state-run Taiwan Sugar Corporation will re-tender for a mixed shipment of up to 29,000 tonnes of corn and 16,000 tonnes of soybeans on Thursday, according to trade sources. No date for the purchase has been officially announced for the tender, Taiwanese traders said

 

In the milling wheat market, South Korean flour millers are expected to seek US No.1 wheat for August shipment while Taiwan Flour Mills Association officials will sign a letter of intent this week to buy 1.7 million tonnes of US wheat in 2008 and 2009, a spokesman for the US Wheat Associates said. The letter of intent will be signed on Capitol Hill on June 7.

 

Taiwan is the seventh-largest buyer of US wheat which averaged about 1 million tonnes a year, according to US Wheat Associates.