September 16, 2010

 

South Korea buys 10 corn cargoes

 

 

With a rise in global prices, South Korea has snapped up at least 10 cargoes of optional origin corn totalling around 550,000 tonnes this month for shipment in November, according to trading executives.

 

One of the world's largest corn importers, South Korea is keen to cover its needs not only as a hedge against rising prices but also because its delivery schedule of feed wheat has been disturbed in the backdrop of the drought in the Black Sea region.

 

Most corn purchases this month have been made at US$278/tonne-US$282/tonne, basis cost and freight, trading executives said Wednesday (Sep 15).

 

They said some deals have been finalised around 250 cents over the December contract on the Chicago Board of Trade.

 

"South Korea is now fully covered for its corn requirements until November," an executive at a global trading company said on the sidelines of the Agricultural Cooperators Conference.

 

He said some buyers have been reluctant to make purchases for December shipment citing high prices.

 

Corn for shipment to South Korea is now being offered at more than US$290/tonne, c&f. Traders were hopeful that prices may decline due to the bumper harvest in the US but concerns over lower-than-expected yields there has pushed up prices. Corn prices are now at their highest levels in almost two years.

 

December corn futures on the Chicago Board of Trade closed 11 1/2 cents or 2.4% higher Tuesday (Sep 14) at US$4.95 a bushel.

 

Strong demand for corn due to tight feed wheat supply is fuelling prices even further and analysts expect the market to rise above US$5 a bushel.

 

South Korea plans to import up to 600,000 tonnes of corn for shipment in December.

 

Traders said supply of around 265,000 tonnes of feed wheat to South Korea, originally scheduled for August, has been delayed due to a slowdown in shipments from Ukraine.

 

"Shipments of July spilled over to August and September and have now started arriving, while those scheduled after mid-August are yet to be made," one of the traders said.

 

Another trading executive said suppliers are trying to arrange shipments from Central Europe and one cargo has also been shipped from the US.