August 6, 2012

 

Due to a severe drought in the US, Asian grain buyers are looking for alternative sources to secure their needs, although supply is limited and prices remain high.

 

Despite a downward correction in futures, the spill over impact on cash prices is slow due to limited availability.

 

"The real problem buyers are facing is that even origins other than the US aren't having enough volumes," said a Jakarta-based importer.

 

Indonesia was buying large volumes of corn from India, but now the pipeline seems to be drying up.

 

Importers are either purchasing corn from Brazil or waiting for the next US crop, but Brazilian corn is at a large premium to US origin, said a Singapore-based trading executive. Small volumes of corn have also been purchased from Pakistan, he said.

 

Taiwan's Corn Industry Procurement Association Tuesday (July 31) bought around 60,000 tonnes of Brazilian corn from CJ International for shipment during October 29-November 12, traders said.

 

The price is around US$14/tonne higher than its previous purchase. Of the total quantity, the association purchased 55,800 tonnes of corn at US$0.714 a bushel premium over the December corn futures contract on the Chicago Board of Trade, basis cost and freight, they said. It bought the rest at a flat price of US$350.35/tonne, C&F.

 

India was expected to be a major supplier of corn in the next quarter, but deficient rains and a lag in summer plantings has poured cold water on exporters' plans.

 

Trading firms are reluctant to offer corn from the next harvest because local prices will likely rise if production falls.

 

Summer plantings, which are harvested in the fourth quarter, account for more than 80% of the country's annual corn output. India has in each of the past two years produced more than 16 million tonnes of corn from summer plantings.

 

India's corn is now offered around US$290-295 per tonne, up from US$220-225 per tonne, free-on-board, two months ago, traders said.

 

The latest offers of Indian corn for Vietnam are around US$324-328 per tonne, C&F, and for Indonesia around US$320-322 per tonne, C&F, traders said.

 

The Kaohsiung branch of Taiwan's Breakfast Soy Procurement Association is seeking between 40,000-60,000 tonnes of soy in bulk in a tender that closes Tuesday (July 31), trading executives said Friday (Aug 3).

 

Taiwan's tenders to import soy in bulk slowed down considerably in recent months as prices surged to record highs and buyers instead purchased smaller containerised volumes at lower rates.

 

Buying US soy in containers is around US$0.10/bushel cheaper than bulk purchases. Taiwanese importers recently bought containerised US soy for shipment in October at a premium of US$2.20/bushel to November soy on the Chicago Board of Trade, basis cost and freight.