Concerned about near record-high freight rates will probably keep East Asian grain importers on the sidelines this week, but Japanese importers could buy corn, anticipating further shipping cost rises, traders said on Monday. Taiwan demand for grain and oilseed for feed was slack as farmers cut livestock numbers ahead of the full of the country's market to meat imports from January 1, 2005, traders said.
Panama dry bulk rates for the benchmark US Gulf to Japan route were assessed at $70 to $75 per tonne as of Monday, just off all-time highs of about $75-$80 posted in February. "We need to cover our requirements even if we think current freight rates are high," said a corn trader with a major Japanese trading firm.
"As it is supported by demand and not speculative moves, I don't think we can assume that it will calm down at some point," he added, referring to the freight rate. Some grain traders said this week could mark a turning point for freight rates, as many players would try to settle their business before the Christmas holiday.
Japanese corn importers have covered about 60 percent of their needs for January to March, or an estimated volume of about 1.7 million tonnes. However, a senior trader at Nonghyup Feed Inc, one of three major South Korean feed makers groups, said Nonghyup would delay purchases of corn for the time being.
"We will wait some more before buying corn for end-January arrival, even though freight rates have risen contrary to our expectations," he said. The group could seek to buy from an expected large supply of Chinese corn in January next year if the benchmark freight rate stayed strong, he added.
In Taiwan, demand for grain for feed is slow as farmers reduce livestock numbers ahead of a move to fully open its market to foreign meat from January 1, 2005. Taiwan will lift quotas on imports of meat, including poultry, in line with World Trade Organisation commitments. Feed demand is expected to fall sharply in 2005, perhaps as much as 30 percent.
But in regular tendering activity, Taiwan's Kaohsiung Breakfast Soyabean Procurement Association would seek to reissue a tender for a US soya shipment this week, said a group official.
The group passed on a tender for between 40,000 and 60,000 tonne of US soyabeans last week. State-run Taiwan Sugar Corp was also expected to tender for around 27,000 tonnes of soya, said a company source.
For soyabean, Japanese importers have largely finished buying for January shipments, with some buying for February emerging. Japan probably bought about 300,000 tonnes of soyabeans for January shipment, below last year's average monthly volume of roughly 334,000 tonnes, traders said.
The decline was anticipated as the industry has been curbing soyabean crushing due to poor profit margins.
One soyabean trader said February requirements may be modest as at least one crusher was expected to shut down its facility for regular maintenance, which was expected to last about two weeks.
Korean feed makers need to cover soyameal for arrivals in March 2005, but they are hesitant to buy now because soaring freight rates are inflating prices of South American soyameal.
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