June 20, 2011

South Korea buys 537,000 tonnes of feed grains as prices fall

South Korea went on a buying spree on Friday (Jun 17), snapping up more than half a million tonnes of grain, to take advantage of the sharp fall in prices this week, trading executives said.

Feed millers returned to the market after five weeks and purchased at least 220,000 tonnes of wheat and 317,000 tonnes of corn, mostly from global commodities trading company Cargill.

The purchases aren't unexpected, as trading executives had told Dow Jones Newswires Wednesday that feedmillers in South Korea were looking to buy around 710,000 tonnes of feed wheat and 1.8 million tonnes corn for September-December arrival.

Friday's purchases are for arrival in September and the first week of October.

The country's last major corn purchase was five weeks ago, when buyers snapped up close to half a million tonnes at US$331-US$341/tonne, C&F for arrival in the next quarter.

The latest corn purchases are US$9-US$20/tonne, costlier than last month but prices are US$40-US$45/tonne cheaper than a week earlier.

Near-month July corn futures on the Chicago Board of Trade briefly fell below US$7/bushel during Asian trading hours on Friday (Jun 17), down around 12% from the record high of US$7.9975/bushel, seen on June 10.

CBOT July wheat futures traded at a three-month low of US$6.64/bushel on Friday due to improved weather in the US, the world's largest grains exporter, and concerns over the health of the global economy.

Overall grains market fundamentals are still strong and prices may rise again, so it makes sense to lock in at least some of the purchases at current price levels, said a Singapore-based executive with a global commodities trading company.