CBoT rally dampens interest in corn and soya

Soaring US corn and soya prices are likely to cap demand from grain and oilseed importers in Asia, traders said on Monday. "High freight rates and CBOT prices have pushed corn import prices up to a 10-year high, the level of what we saw this year," said an official at a member company of the Korea Feed Association.
"We have no choice but to wait for a dip in prices." Chicago Board of Trade corn prices surged more than 2 percent to a 3-1/2-month high on Monday on crop worries due to hot and dry weather in the eastern part of the US Midwest.
July corn prices in after-hours electronic trade on the CBOT were trading at $4.27-1/4 per bushel, up 8-1/4 cents. July soyabeans were up 13-1/2 cents at $8.60-3/4 per bushel.
A monthly US Department of Agriculture crop report, to be released later in the day, will be carefully watched, traders said. Some analysts expected the US government to lower its corn and soyabean ratings by 2 to 4 percentage points in the good-to-excellent category on Monday's weekly crop progress report. "But the concerns over weather and crop are overblown. Higher grain prices will hit demand in the end," said a Seoul-based trader.
In Tokyo, corn importers are bracing for announcements later this week by Japanese feed makers on their product prices for the July-September period. A price rise in imported corn, the main component of livestock feed in Japan, is expected to boost compound feed prices by about 1,000 yen ($8.10) a tonne on average for the quarter to around 54,700 yen, they said.
It would be the fourth straight quarter farmer's pay more from the previous quarter. "It's difficult to tell how vulnerable farmers are to a continued rise in the feed prices," said a trader at a Japanese company. "It's all up to the demand side."
Despite expected make-up payments from price stabilisation funds raised by feed makers and users, farmer feed costs for July-September would be around 10 percent higher than a year. Also, concerns that China may not issue a second batch of corn export quotas following permits issued for some 1.5 million tonnes in April have overshadowed Japanese buying.
A Tokyo-based corn trader said South Korean buyers have quickly shifted their focus to US corn from Chinese corn in the past few months and covered their needs up to October shipments of the US origin.
But some Japanese importers are behind the curve and have recently bought August shipments of the US origin with higher prices, he said. As for soyabeans, activity is expected to be slow this week.
Japanese soyabean importers have almost finished their requirements of US soyabeans for July shipments, but they are reluctant to start those for August delivery, traders said. "Users expect freight rates to fall during summer, as was the case before. They're not in a hurry," said a trader at a Japanese trading firm.