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Markets

Pakistan sells corn, Australian wheat exports slow

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cornSINGAPORE: Pakistan sold around 20,000 tonnes of corn to Indonesia and Malaysia this week on competitive offers, while Australia is struggling to export wheat as a result of higher domestic prices and competition from cheaper Black Sea cargoes.

The Pakistani corn was traded at $290 a tonne, including cost and freight, in Indonesia in a recent deal, compared with around $315-$320 a tonne being quoted for Indian origin and $360 a tonne for South American cargoes, traders said.

"Pakistan has been very aggressive in the last few weeks," said one executive with a Singapore-based trading company, which sells Indian and Pakistani corn in Southeast Asia. "It is really undercutting Indian and South American corn."

Still, traders said it was not possible to completely replace South American corn with Asian supplies, which largely includes Indian, Pakistani and Thai corn.

"At best they can satisfy 20 to 25 percent of the demand, the balance will have to come from South America or the United States," said another trader.

"At the moment buyers are not very active because the US market has been volatile, we should see some action now as the USDA report is out."

US corn futures gained more ground on Friday, rising half a percent to trade near a 1-week top as a government forecast of lower production continued to buoy the markets.

In its first estimate of the crop based on field surveys, the US Agriculture Department slashed its estimate of corn yields by 4 percent. Farmers will now bring in a barely adequate harvest of 12.9 billion bushels, instead of the record crop that was within reach until the heat hit.

Traders said Malaysia was running thin on corn stocks, with positions for around 100,000 tonnes open for September and some 200,000 tonnes for October shipment.

"The pipeline is empty as they have been delaying purchases due to the market volatility," the trader said. "They will get some from Pakistan but most of it will have to be South American."

The Korea Feed Association in Busan this week bought 55,000 tonnes of US No.3 or better corn for October arrival at $351.49, including $1.50 per tonne of two-port delivery charge.

South Korea was also active, with KFA buying 110,000 tonnes of South American origin soymeal from Glencore. It bought 55,000 tonnes at $414.41 a tonnes for November shipment and another 55,000 tonnes at $418.74 a tonne for January arrival.

In the wheat market, US hard red winter was being quoted at $385 a tonne, C&F and high-protein spring wheat was offered at around $430 a tonne.

Australia prime wheat was offered at around $345 a tonne and Australian standard wheat close to $330 a tonne. "There is not much business being done in Asia for Australian wheat, the price is too high."

Japan's farm ministry bought 135,846 tonnes of milling wheat from the United States, Canada and Australia in a tender that closed on Thursday.

WEEKAHEAD

Asian buyers will closely watch the US corn and soybean crop progress report next week, which will provide direction to benchmark Chicago prices.

The condition of the US corn crop declined more than expected, with hot and dry weather stressing the crop, according to a USDA report on Monday. It rated the corn crop at 60 percent good to excellent, down 2 percentage points from a week earlier and down from 71 percent a year ago.

The market is also looking forward to corn purchases by Malaysia which is running low on stocks. Traders said the country is likely to seek around 100,000 tonnes for September and some 200,000 tonnes for October shipment.

Copyright Reuters, 2010

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