June 20, 2011

 

Asia eyes August corn, wheat buyers on sidelines

 

 

Feed millers from Malaysia and Vietnam are likely to be in the market to purchase corn for August shipments as a near 11% slide in global prices this week has made the grain attractive for importers.

 

Asian flour mills, most of which are covered for wheat supplies until August, remained on sidelines this week despite a selloff in the grain markets, regional traders said.

 

"This selloff is definitely not aligned to broader supply and demand, it is a very tight carryout and the crop is not made yet," said one feed grains trader with an international trading company in Singapore.

 

"If you are a regular buyer, it makes sense to lock shipments before tight supplies push up prices again," he said.

 

South Korean millers, which bought 55,000 tonnes of corn from Cargill earlier this week, are seeking additional 350,000 tonnes of corn and 220,000 tonnes of feed wheat for September and October arrivals.

 

US wheat fell on Friday to a three-month low, while corn was steady near a one-month low as concerns over Greece's debt crisis continued to weigh on the agricultural markets.

 

Front-month corn and wheat are on track for a decline of about 11% this week -- the biggest weekly loss for the two markets since early March.

 

Traders said Malaysia is yet to cover 200,000 tonnes of corn and millers are expected to use this opportunity to lock supplies with buying seen emerging next week.

 

"They don't need much for July and they can go on for a few weeks before placing orders, but this price level makes sense to buy now," said another Singapore trader.

 

Corn futures have fallen about 12% since hitting an all-time high of US$7.99-3/4 on Friday - slashing gains built into the market as US planting delays threatened crop prospects at a time when stocks were set to fall to 15-year lows.

 

In the wheat market, buyers were not attracted by the price drop, given the pressure from the US winter crop harvest and ample supplies in the international market.

 

There have been several enquiries for wheat, but not many deals have been reported, a trader in Singapore said.

 

Traders said there was not much interest in Russian wheat among the Asian buyers because the prices were not very attractive and importers were cautious.

 

"Wheat fundamentals are not bullish as the supplies are not as tight as corn," said a grain trader in Singapore.

 

Russian wheat in Asia was quoted around US$350 to US$355 a tonne, including cost and freight, compared with Australian prime wheat being offered near US$365 a tonne.

 

The market is eyeing a US crop progress report due on Monday (Jun 20) for price direction.

 

In addition, buyers will also closely watch the G20 agricultural ministers meet next week at the first-ever summit designed to discuss potential policies aimed at tackling food price volatility and security.