September 24, 2008

South Korean feedmillers are likely to float tenders for importing feed wheat and corn next month as the country begins stocking up for the first quarter of 2009.

On Sept. 12, Major Feedmill Group, a key buyer, purchased around 50,000 tonnes of feed corn and has been waiting since then for prices to fall further, before floating a fresh tender.

South Korea, Asia's second-largest feed corn importer, may buy more of wheat as prices of the commodity may decline further on expectations of a bumper global harvest, and substitute it with corn. At present, feed wheat of Ukrainian origin is available at US$270/tonne, on a cost and freight basis, around US$40/tonne cheaper than corn prices.

Traders may also buy U.S. corn from the new crop. Still, an unexpected rise in ocean freight costs from South Korea to the U.S. has hit import plans, they said.

"In the last two weeks, freight cost from Incheon to Pacific Northwest has shot up to US$65/tonne from US$35/tonne," said a trader in Seoul.

South Korean traders also said they are holding back plans to import soymeal on expectations of a further fall in prices as India gears up to harvest a possibly record soybean crop next year.

They said that while Indian soybean is currently available at US$440/tonne, cost and freight basis, in South Korea, significant buying will only start once prices fall below US$400/tonne.

In other news, the Philippines may start rice imports for 2009 by the end of this year to boost local stocks, taking advantage of the falling global prices.

The move may further dampen prices in the country already reeling under near-record imports and bumper domestic harvest. Local farmers have warned that fall in domestic rice prices could hit paddy acreage next year.