Japanese and Taiwanese buyers of corn and soyabeans are likely to take a low profile this week as high levels of stocks and slack domestic demand turn them cautious about making fresh import deals, traders said on Monday.
In Taiwan, large buyers of grain and oilseed have struggled to run down high stocks amid low demand in the summer season.
But one group bucking the trend is the Members Feed Industry Group (MFIG), which last on Friday bought a small shipment of 33,000 tonnes of US corn from ADM. ((Archer Daniel's Midland).
"The smaller members of the group were complaining that they needed to buy despite a lack of interest from larger members, which are still well stocked up until September," said a Taipei-based trader.
Concern about a possible rebound in freight rates as Chinese buyers return to the market also helped spur the purchase, said a trader with the group.
Domestic prices for corn appear to have stabilised at around T$5.8 ($0.173) per kilogram down 20 percent from T$7.3 in the year due to previous overbuying, China imports and slackened demand from the feed industry.
Demand for corn is usually weak between May and august, when consumption drops by around 10 percent, traders said.
In regular tendering, the state-run Taiwan Sugar Corp said it might seek a mixed shipment of 21,000 tonnes of US corn and 14,000 tonnes of US soyabeans on July 7, although a final decision has yet to be announced.
An executive said the shipment would be for delivery between July 17-31 from the US Gulf and August 1-15 from the Pacific Northwest.
Japanese soyabean buying, meanwhile, was expected to be very slow this week, as oilseed crushers consider slashing the volume of soyabeans they buy for August shipment due to high Chicago prices and poor soyameal sales in the domestic market, traders said.
In normal years, Japanese crushers buy 330,000-340,000 tonnes of soyabeans for August shipment.
But this year, purchasing volume could be far less as companies have been cutting soyabean crushing by 10-15 percent since April, they said.
"For shipment from April to July, Japanese crushers bought around 280,000-290,000 tonnes of soyabeans monthly. But for August shipment, volume could be much smaller," one trader said. "I expect crushers will cut back soyabean stocks as much as possible and just cover their needs," he said. As of the end of April, soyabean stocks in Japan totalled 297,616 tonnes, against 292,107 tonnes a year, the latest data from Japan's Agriculture Ministry showed.
Japanese oilseed crushers have been cutting soyabean crushing this year as 15-year highs in soyabean prices on the Chicago market have squeezed their profit margins, traders said.
Wide price differentials between old and new crops have also dampened Japanese appetite for old-crop US soyabeans, they said. On Friday, the nearby July contract on the Chicago Board of Trade (CBOT) closed at $9.20-1/2 a bushel, more than $2 higher than the new-crop November contract, which ended at $7.09-1/2. As for South American soyabeans, Japanese importers have so far made deals for 480,000-500,000 tonnes of new-crop Brazilian beans for March-August shipment this year, traders said.
Japanese could buy an additional 200,000-250,000 tonnes of Brazilian soyabeans for August-September shipment if Brazilian beans stayed price-competitive against US crops, they said.
Japanese corn buyers would likely stay quiet this week as they have almost covered their July-September shipment needs, and it was too early to start purchasing for the fourth quarter, traders said.
"Feed makers have heavy corn stocks after they bought aggressively for July-September shipment," one trader said.
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