South Korean feed importers will seek corn and soyameal this week, anticipating a further rally of grain prices, while Japanese corn buyers have mostly covered their needs for January-March, traders said on Tuesday.
Corn futures at the Chicago Board of Trade (CBOT) ended higher on Monday on technical buying after hitting overnight contract highs in most months.
Strong demand for US corn by ethanol manufacturers, livestock producers and exporters has helped send the benchmark Chicago futures price to a 10-year high, and remains a supportive feature.
South Korean buyers are worried that supply disruption of other major exporters in the corn business, Argentina and China, would continue to lift corn prices.
"Grain importers had been slow in buying corn for the past few weeks, waiting for lower prices. But they seem to be starting to jump into the market again after seeing the CBOT market rally," said a Seoul-based trader.
South Korea's Nonghyup Feed Inc has issued a tender to buy up to 165,000 tonnes of optional-origin corn for March through May arrivals. It is also seeking up to 55,000 tonnes of soyameal and 11,000 tonnes of rapeseed meal. The tenders by South Korea's biggest feed maker close at 4:30 pm (0730 GMT) on Tuesday, traders added. But some industry experts said the latest outbreak of highly contagious bird flu in South Korea could hit demand for feed.
South Korea's farm ministry said on Tuesday it had found a suspected case of highly pathogenic bird flu at a second poultry farm, after confirming on Saturday it had its first outbreak in three years of the H5N1 strain.
"It is hard to tell how much feed output will decrease as we are at the beginning stages of the outbreak, although it is pretty much sure that feed demand will fall because of it," said an official at a major feed company in South Korea.
In Japan, corn importers have so far covered about 70 to 80 percent of their needs for the January-March period, and some are eager to fix prices for the remaining 20-30 percent before the country's benchmark wholesale compound feed price is set in coming weeks.
One trader said the benchmark price could be raised by some 10 percent from the previous quarter, reflecting a rally in CBOT prices, higher freight rates and a weaker yen.
"We're in the third round of price talks," the trader said, estimating that the remaining 500,000 tonnes of US corn imports for January-March are under discussion, out of a planned purchase of some 2.3 million tonnes in total, aside from those of non-GMO grain to be bought under special supply arrangement.
US corn premiums for January-March were offered on Tuesday to Japanese buyers at slightly less than $2.30 a bushel over CBOT's March contract on a cost-and-freight basis, up from around $2.20 a month.
Importers in Taiwan will likely be quiet this week as high prices dampen interest, although demand is seen increasing ahead of the peak season for feed around the New Year. "Prices are just too high at the moment, that should dampen interest," said a Taipei-based merchant at an international-based trading house.
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