September 30, 2011

Taiwan Flour Millers' Association (TFMA) Thursday (Sep 29) purchased 52,920 tonnes of US wheat from United Grain Corp (UGC) and CHS Inc, at prices considerably lower than its previous tender.

The grains are scheduled for October 31 - November 14 shipment, traders said.

The association's import prices for high-quality milling wheat, which are widely considered a benchmark in Asian grain trade despite its relatively small import volumes, have been falling over the past few months due to ample global wheat supply.

TFMA bought dark northern spring wheat with 14.5% protein from UGC around US$401/tonne, free on board, the traders said. After factoring in freight charges of US$34/tonne, the total cost is US$435/tonne.

The association bought hard red winter wheat with 13% protein from CHS around US$344/tonne, FOB, or US$378/tonne, cost and freight. It paid US$439/tonne, C&F, for the same variety with 12.5% protein in June.

It bought western white wheat with 9% protein from UGC around US$283/tonne, C&F, down from US$343/tonne.

Prices have softened due to the upcoming US harvest even though production is likely to be lower than last year.

In the first week of June, Taiwan bought dark northern spring wheat with 14% protein around US$557/tonne when spring wheat futures on the Minneapolis Grain Exchange were around a three-year high above US$10.60 a bushel. The near-month December contract is now around US$8.61/bushel.

The USDA forecasts US hard spring wheat output in the marketing year that started June 1 to fall 17% to 475 million bushels, which may drag down exports by 23% to 260 million bushels.

Some traders expect prices to rebound as supply dwindles in the next few months.