Asian importer may go for US corn as prices fall

Asian grain importers are likely to seek corn as US prices fell sharply on bearish US government data released on Friday, but persistently high grain import costs and freight rates will discourage active purchases, traders said on Monday.
Corn futures at the Chicago Board of Trade fell 3 percent on Friday to an eight-month low after the USDA pegged 2007 US corn plantings at 92.888 million acres, the largest in more than 60 years.
"Corn futures collapsed, but rising freight rates are a burden to buyers," said an official at Nonghyup Feed Inc spot voyage fixtures for modern panamax rates for the benchmark US Gulf to Asia route are at around $80 per tonne, up from $74 a week ago, shipping brokers said.
Despite a steep fall in US corn prices, Japanese feed makers remain reluctant to talk with traders about their purchases for the October-December period. Importers have completed their requirements for the July-September period, with some wary about lower domestic meat and egg production causing a decline in feed demand.
Japanese livestock farmers have been under pressure from a rise in compound feed costs for the fourth straight quarter in a row in July-September. "A rise in costs to farmers has not been fully reflected in consumer prices. A consequence would be a production adjustment in order to prop up the (meat and egg) prices," a Tokyo trader said.
A manager at a Japanese trading firm said some corn purchases may be made this week as a rally above $4 a bushel for CBOT corn futures looks difficult after the USDA's huge US corn plantings number. "Importers can wait a bit longer to see if prices will fall further," he said.
As for soybeans, Japanese importers were also hesitant to decide when to buy the remaining half of the requirements for August, traders said. Friday's USDA plantings report showing a sharp cut in soybean acreage took the Chicago market off guard.
"Depending on the weather, a rally above $10 a bushel is possible like in 2004. But it's too early to bet on that scenario," said a manager at another trading firm. Taiwan grain importers will be quiet this week, with only one possible corn tender, as slower seasonal demand and high prices could sideline buyers.
"Demand has fallen slightly, but that's due largely to seasonal factors as the weather is hotter," said an executive at the Great Wall Feed Group, which has been buying US corn via containers in recent months. Meat consumption slows during the hot summer months, with animal producers requiring less animal feed.
Corn futures were at 10-year highs during the spring planting season, leading to an almost 13 percent drop off in Taiwan corn imports in the first four months of the year, according to customs data. Taiwan imported 1.52 million tonnes of corn between January and April, according to the data, with the United States supplying virtually all of that amount.
Only one group is rumoured to be mulling a corn purchase, executives say. "I've heard that the Maize Industry Procurement Association could be looking to tender in the next week or so," said the executive. But a group official said that there were as yet no plans to hold a buy tender.