December 4, 2006

 

Asia corn buyers scramble for corn

 

 

Asian corn buyers have been facing a hard time trying to secure supply as dwindling stocks and trade restrictions by leading exporters look set to lift prices beyond current 10-year highs.

 

This has also intensified owing to limited exports by China and Argentina and a possibility of a ban on Indian corn exports. Besides, there are not too many alternatives to corn available at competitive prices. The supply of feed wheat, which is often used as a substitute, has been hit drastically due to erratic weather.

 

There could be a scramble for corn until March, pointed out Amit Sachdev, representative for India of the US Grains Council.

 

According to traders, Asian buyers have been making desperate inquires for corn even from non-traditional suppliers considering the tight supplies until March, when the new Argentine crop is harvested. They were even willing to get some from Myanmar, said one trader.

 

US corn prices have surged more than 50 percent since mid-September and hit a new 10-year high on Thursday, Nov 30. December corn closed at US$3.77 per bushel, after climbing as high as US$3.78.

 

A factor driving corn prices apart from the booming ethanol industry seems to be the surging domestic consumption in China, according to a report.

 

China, on which most Asian buyers depend for small cargoes, sold nearly 4 million tonnes of corn for shipment between November and February. But Asian buyers fear China would not be able to export much corn next year and could even default on some of its recent corn sales to South Korea because of increasing domestic prices.

 

Leading corn sweater producer Xiwang Sugar Holdings, said last week it would apply for 2007 corn import quotas totalling 600,000 tonnes, against this year's quota of 100,000 tonnes.

 

Leading Southeast Asian corn importers get the bulk of their needs from Argentina. But with the country, suspending export permits last month on surging domestic demand, some Southeast Asian buyers have been picking up cargoes from Thailand.

 

Thailand could export some 100,000 tonnes of corn to Malaysia, Vietnam and Indonesia this month, according to traders. Though most deals were done between US$185 and US$190 a tonne, free-on-board, Thai prices have also started climbing now. Besides, the country wants to keep corn for its poultry sector, said a Singapore-based trader.