October 30, 2008

Japan's traders to continue hand-to-mouth grain imports

Japanese grain buyers are likely to continue importing corn and soy on a hand-to-mouth basis over the next three weeks at least as they hope grain prices will fall more, said a trader in Tokyo Thursday, 23 October 2008.

Nobuyuki Chino, president of grain trading firm Unipac Grain Ltd said every trader has a question in their minds about the assurance of the absolute bottom for CBOT corn and soy prices. Traders will avoid large imports for as long as they can.

Chino added that many Japanese traders were affected in the year stocking up higher-priced grains, fearing further price gains later in the year, so now they are in no rush to build their inventories.

Especially for corn, Japanese traders are in no hurry for more purchases, as they have already imported 3.6 million tonnes for the fourth quarter out of a total requirement of 4.1 million tonnes and in the case of  soy, stocks are sufficient until December.

Once buying picks up pace late next month, Chino feels most of it will be for the first quarter of 2009.

While traders await a further fall in grain prices, they are also curious about the direction of ocean freight costs.

Over the last three months, ocean freight costs from the US Gulf to Japan have fallen by 75 percent. The freight market still is quite depressing.

As for the direction of CBOT grain futures, Chino said the market is currently dysfunctional and not aiding in price discovery. Once the volatility tones down, fundamentals will once again surface as true price determinants.

CBOT soy and corn futures have each fallen around 11 percent so far this month.