November 15, 2012

 

Asian grain, oilseed buyers may increase purchases on lower prices
 

 

In order to take advantage of the latest decline in prices, Asian buyers are expected to boost grain and oilseed purchases this month.

 

Prices have fallen considerably in recent weeks due to higher-than-expected output and harvest pressure in the US and on-going plantings in South America.

 

Near-month November soy on the Chicago Board of Trade is trading around US$14.3175 a bushel, down from a record US$17.9475 reached on September 4.

 

December corn on CBOT is now trading around US$7.23 after hitting a record US$8.4375 on August 10, while wheat is trading around US$8.55, well off a multiyear high of US$9.4725 on July 23.

 

"It is a good opportunity to buy cash grain at current prices as there are fundamental demand-supply related reasons due to which prices can rise again soon," a Jakarta-based executive with a global commodity trader said.

 

Global wheat supplies are tight due to lower production in Australia and the Black Sea region. Recently, near-month CBOT prices once again climbed above US$9, a Singapore-based trader said.

 

Taiwan Flour Millers' Association is seeking close to 68,200 tonnes of US wheat for December-January shipment in a tender closing Thursday (Nov 8).

 

Japan's agriculture ministry is seeking 120,000 tonnes of feed wheat and 200,000 tonnes of feed barley in a simultaneous-buy-and-sell tender, a government official said.

 

Bangladesh has received three offers in a tender to import 50,000 tonnes of wheat Monday (Nov 12), with the lowest offer at US$359.66/tonne, cost, insurance and freight, a Dhaka-based government official said.

 

The US on Friday (Nov 9) revised up its estimate for the country's soy output in the marketing year that began September 1 by three million tonnes, on top of a six-million-tonne increase last month. US soy output will now likely be 13% higher than expected two months ago, though still lower on year.

 

Chinese buyers are aggressively seeking soy for shipment in the second quarter of next year, but a large part of the supply will likely be sourced from South American countries that are offering at a discount to the US, a trader in Singapore said.

 

Indian soymeal prices are around US$100/tonne lower than 10 weeks ago. Last week, Vietnam's Proconco bought 10,000 tonnes of Indian soymeal around US$586/tonne for November 15-December 15 shipment to Ho Chi Minh City, cost and freight and 8,000 tonnes around US$584/tonne, C&F for November 20-January 20 shipment to Hai Phong, traders said.

 

Soy should still find support from supply-demand fundamentals and the US may still see soy reserves drop to a level never seen before by next spring, Karl Setzer, an Iowa-based analyst with MaxYield Cooperative, said. Soy stocks may be just enough to satisfy domestic needs, and even that is questionable, he added.

 

Asian buyers are also seeking corn to capitalise on the latest downward price correction. Animal feed millers in South Korea have bought at least 269,500 tonnes of optional-origin corn for February, March and May arrival around US$334/tonne, US$337 and US$323.50 respectively.