July 6, 2011

 

Asian mills eye corn, wheat shipments on lower prices

 

 

Asian grain importers are actively seeking cargoes after a steep selloff in global prices last week, with South Korean feed makers leading the show, eyeing about 350,000 tonnes of corn, and Sri Lanka buying US winter wheat.

 

Millers in Malaysia, Indonesia, Thailand, and the Philippines are enquiring about corn and wheat shipments after a sell off last week, which saw US corn fall nearly 20% from record highs and front-month wheat losing a quarter of its value in June.

 

"We are getting flooded with enquiries from buyers all over Asia," said one trading manager with an international grains trading company in Singapore. "South Korea is already in the market and we expect others, including Taiwan, to come up with tenders on Wednesday (Jul 6) or later this week."

 

CBOT corn jumped more than 1% on Tuesday (Jul 5), while wheat climbed nearly 2% on strong physical demand and improved global risk appetite following last week's selloff that was prompted by prospects of higher US supplies.

 

South Korea's largest feedmaker Nonghyup Feed is seeking a up to 190,000 tonnes of US No.3 or better corn for feed, while Major Feedmill Group is seeking up to 160,000 tonnes.

 

"I don't think current prices are at the bottom levels but before reaching the bottom, the prices are projected to go through some corrections," a senior trader at Nonghyup Feed told Reuters by phone.

 

"We don't want to miss a chance to buy grains at a lower cost than our previous purchase."

 

Although traders said South Korea's purchases were routine, importers were buying on Tuesday to lock in lower prices.

 

"Today's procurement is a routine one that we have been scheduling, a senior grain trader at MFG said. "In terms of timing, we decided to move today as there is a risk for prices to rebound after a sharp fall."

 

Traders said China, the world's second largest consumer of corn, is likely to be in the market for additional supplies as the nation moves to build stockpiles at lower prices.

 

"Corn is actually quite oversold. We can see bargain hunters coming in and there is some commercial buying from feed millers in Asia," said an analyst.

 

"Usually, we see China coming to buy when prices are really low. We can expect them to import more."

 

China purchased as much as 1.6 million tonnes of new-crop US corn in recent dealings, taking advantage of the steep price drop to replenish its reserves.

 

The USDA on Friday (Jul 1) announced the sale of 1.14 million tonnes of US corn to unspecified buyers, but traders said it effectively confirmed rumors in the past two weeks that China had bought a large quantity of corn from the US.

 

Traders said Sri Lanka bought 55,000 tonnes of US hard red winter wheat on Friday after prices dropped. They paid around US$325 a tonne, including cost and freight, for wheat with 11% protein and US$355 a tonne for 12% protein content.

 

Malaysia is looking to buy 60,000 tonnes of corn for August and September shipment after buying some 30,000 tonnes a week ago at US$330 a tonne (C&F).

 

Japan, the world's top importer, is also likely to be in the market, traders said.

 

Japanese buyers have yet to cover 20% of their requirement for August, while positions are open for more than half of September imports, Tokyo grains traders said. Typically by early July, Japan is done with its third-quarter purchases.