August 5, 2010

 

Asia's traders hold off grain import tenders on high prices

 

 

Importers of wheat, soy and corn in many Asian countries have postponed purchase tenders citing high prices, according to trading executives and buyers.

 

Traders expect a steep price rally driven by drought in Russia, expected poor crops elsewhere and futures speculation to eventually ease, but it is unclear when, and many are holding off imports for now.

 

"Prices have moved up too high and too fast, so it is better to wait until they stabilise," a corn importer in South Korea said.

 

The nearby wheat futures contract on the Chicago Board of Trade Monday (Aug 2) closed at US$6.93 1/4 a bushel, up 62% from a nine-month low around US$4.25 in June. Prices fell to US$6.80/bushel Tuesday (Aug 3).

 

"Feed wheat prices have shot up and it isn't viable to make purchases," a Taiwan-based trading executive said. "But we still plan to tender for US milling wheat this week."

 

Prices of feed wheat on a delivered basis have risen by around US$90 a metric tonne since early June, damping buying interest.

 

South Korea, a regular buyer of corn, wheat and soy and meal, currently has no grain import tenders scheduled because prices are too high, an importer in Seoul said.

 

The surge in wheat prices has also boosted the corn market, prompting buyers to turn cautious. "There is uncertainty over how long the rally will last, and this has resulted in a slowdown in purchases," an analyst in Singapore said.

 

The high prices are hampering private Japanese importers from securing around 2.6 million tonnes of corn for October-December shipment - although traders said since requirements until next month are well covered, there is not any hurry yet to secure the supply.

 

"There is at least a US$6-to-US$8-a-tonne gap in the price ideas of buyers and sellers, and therefore many importers prefer to wait and watch," a Tokyo-based executive at a global trading company said.

 

However, regular government tenders in Japan for milling wheat are being announced, and one seeking 124,469 tonnes of US wheat is scheduled Thursday (Aug 5).

 

In Taiwan, of the Breakfast Soy Procurement Association's Kaohsiung branch, a regular buyer, has not issued import tenders for the last three weeks, but also plans to try its luck Thursday.

 

Traders said it will tender for a cargo of 40,000 tonnes to 60,000 tonnes of optional origin soy for shipment between September 21 and October 5.