October 25, 2010

 

Malaysia eyes December-January wheat, India sells competitive corn

Malaysian flour millers are likely to cover December-January wheat shipments in coming days as a decline in global prices has lured buyers back to the market, while India is selling corn on competitive offers.

 

"The demand should be coming back as prices have fallen significantly. Several importers in the region are still open for year-end shipments," said one Singapore-based trader, who sells US and Australian wheat into southeast Asia.

Thailand bought around 100,000 tonnes of US wheat in two cargoes of spring, winter and white wheat for December arrival, regional traders said.

 

In the physical market, US dark northern spring wheat was being offered around US$430 a tonne, including cost and freight (C&F), down US$10 from a week ago and soft white wheat was being quoted near US$330 a tonne.

 

Australian wheat prices have also eased, with Australia prime hard wheat selling at US$420 a tonne and Australian prime wheat around US$335 a tonne.

 

Traders said the differentials between high-protein and lower-protein wheat have widened following excess rains in key producing regions of Australia and quality problems with the Canadian crop.

 

"The spread has widened significantly. High-protein varieties are selling at a premium of US$80 to US$90 a tonne over low-protein wheat," said another Singapore-based trader.

 

The normal spread between the two varieties is around US$30-US$40 a tonne.

 

On Thursday (Oct 28), Japan's farm ministry bought a total of 122,861 tonnes of milling wheat from the US, Canada and Australia. The wheat is for loading in December.

 

In the feed grains market, India was active, with sales of around 25,000 tonnes reported this week to Malaysia and Vietnam in containers.

 

India is offering corn at US$260-$275 a tonne (C&F) compared with rival South American cargoes being quoted around US$300 a tonne. "India is competitive in containers, while its bulk sales are more expensive at around US$290 a tonne. So, buyers are taking containers," the first Singapore trader said.

 

The feedmaker bought 55,000 tonnes of US No. 3 or better grade corn from LDC at US$2.03 per bushel over CBOT March <CH1> futures contract, C&F.

 

Malaysia is still open to buy about 20,000 tonnes of wheat for December and 60,000 tonnes for January shipments and traders are hoping to sign some deals after a near 5% drop in benchmark CBOT prices <Wc1> this week.

 

"Malaysia will be active next week as they are looking to buy December and January wheat," the first Singapore-based trader.

 

Eastern Australia's 2010/11 wheat harvest faces a delay of up to three weeks due to persistent rain, posing a threat to exports, analysts said.

 

Harvesting kicked off late last month in the small wheat producing region of central Queensland state, but further south the forecasts of continuing rain point to harvest delays.

 

India is likely to continue selling corn in the region given its price competitiveness, traders said.