October 23, 2012

 

Asian wheat demand to increase on higher price concerns

 

 

In the next few days Asian wheat demand will be higher as buyers snap up cargoes in anticipation of price increase due to tightening supply from the Black Sea region.

 

There is not much demand for Black Sea region wheat in East Asia but the tightening supply has a cascading effect on the overall grains complex.

 

"Wheat is the market leader in the grains complex at the moment and also providing support to the prices of corn and soy," said Kaname Gokon, deputy general manager at Tokyo-based brokerage Okato Shoji.

 

Near-month wheat futures on the Chicago Board of Trade hit a four-year high of US$9.4725 a bushel in July. Importers and analysts expect the level to be tested again in the next few months. The news that Ukraine will not be left with any wheat for exports by next month has helped to push the benchmark higher so far Monday (Oct.22), to US$8.82/bushel.

 

Traders expect prices to rise further and have been quickly snapping up cargoes in the past week. Flour millers in South Korea have purchased two cargoes totalling 50,000 tonnes of US wheat from STX Corp. for shipment in January, trading executives said.

 

Flour millers purchased soft white wheat with 9.5% protein around US$326-329/tonne, hard red winter grade with 11.5% protein around US$364-365/tonne and northern spring wheat with 14% protein around US$375-377/tonne, all free-on-board, the executives said.

 

The Busan branch of the Korea Feed Association on Friday (Oct.19) bought 55,000 tonnes of optional-origin wheat from Hamburg-based commodity trading company Alfred C. Toepfer International at US$329.10/tonne, cost and freight, for arrival by January 15.

 

There is an additional charge of US$1.50/tonne for unloading part of the cargo at a second port, the executives said.

 

This is Toepfer's second successive sale of wheat to South Korean feed millers in as many days. On Thursday (Oct.18), the company sold 55,000 tonnes to Nonghyup Feed Inc. at US$325.95/tonne, C&F.

 

Traders expect at least some Indian wheat to be supplied in the deals. The Indian government is selling its surplus stocks to private exporters via tenders. The highest bids it received in two tenders Friday (Oct.19) were around US$311.75/tonne and US$310/tonne, free on board.

 

Japan is now purchasing wheat for arrival by January, a government official in Tokyo said. The country has so far bought 401,569 tonnes milling wheat this month.

 

The Taiwan Flour Millers' Association is seeking two cargoes totalling 104,000 tonnes of US wheat for November 27-December 11 and December 13-27 in a tender that closes Tuesday (Oct.16).

 

Bangladesh is seeking 50,000 tonnes of optional origin wheat in a tender that closes November 1.