East Asian buyers are seeking corn, soybean, soymeal and wheat this week, although some are opting to wait and see whether shipping costs sink lower than their recent dip to more than one-year lows, traders said on Monday. Many South Korean importers were reluctant to import Chinese grain due to quality concerns and after China's revaluation of its yuan currency last week made Chinese grain less competitive in price terms, they said.
"Buyers psychologically are hoping for a further decline in rates, and this is making some importers want to wait a little more before buying," a Tokyo trader said. Rates for ships carrying grain and other dry bulk cargoes have breached $40 per tonne, their lowest in more than a year and down more than 40 percent from this year's peak hit in March.
"The near-term freight rates are weak, but it's not very clear how rates will be for the months ahead, such as September and October," another trader said.
Japanese buyers still need to cover their soy requirements for September shipments, having only covered an estimated 30-50 percent of their needs for the month.
For corn, Japanese traders are close to completing their purchases for the July-September quarter, having purchased about 90 percent of their needs. Some may even begin covering their needs for October-December this week, traders said.
Japan's corn importers have been cautious about buying the grain since March when Syngenta AG said some of its corn seeds in the United States had been contaminated with Bt-10, an unapproved biotech corn strain.
Japanese authorities have so far found six cargoes tainted with the GMO corn strain.
Japanese trading firms had begun checking US cargoes before loading, helping ease buyers' fears, a Japanese corn trader said. "I think the confusion from the issue is subsiding," he added.
Japanese authorities have started a risk assessment of Bt-10 to study whether guidelines can be eased on the biotech corn strain, which has been modified to produce a toxin that kills pests, but they are unlikely to reach a conclusion for a while.
In Seoul, the Korea Corn Processing Industry Association was considering two panamax-sized, optional-origin corn cargoes at food-grade for late November and December arrival, traders said.
Korean feed makers are keen to obtain more quality guarantees for Chinese grain. They hope to secure a stipulation allowing them to pay after the quality of Chinese grain is checked at arrival ports instead of making payment after the supplier checks quality at the port of loading.
"Under such a condition, buyers would be able to claim compensation if quality fell short of their standards," a Seoul trader said.
But some suppliers have refused to accept the inclusion of the quality check condition, limiting Chinese grain purchases, traders said.
Meanwhile, China's move to revalue its yuan by 2.1 percent versus the dollar last week could also reduce buyers' appetite for Chinese grain, Korean traders said.
South Korea depends heavily on Chinese grain for its food and feed needs, with 70 percent of its total corn imports coming from China.
In the wheat market, Korean flour millers are seeking US No 1 wheat for October arrival to Inchon and Pusan, traders said.