Japan's corn buyers will remain on the sidelines this week due to concerns that cargoes could be contaminated with an illegal, genetically modified strain, while South Korean importers should be active, traders said on Monday. Some Taiwan feed makers are considering their next corn purchases either this week or next as they eye lower freight rates resulting from more measures by China's government to cool its economy, which has spurred a boom in commodities markets.
In South Korea, importers are seeking US No 1 wheat and corn for feed production this week, traders said. Nonghyup Feed Inc plans to buy one Panama-sized corn cargo for arrival on July 25 this week if grain futures on the Chicago Board of Trade fall, an official said.
"Yet, we will wait as much as possible before buying corn for arrival in August and onward," the official said. Daihen Flour Mills Co Ltd is considering a tender to buy US No 1 wheat for delivery in late June, traders said.
Donegal Flour Mills Co Ltd and CJ Corp are also thinking of buying US No 1 wheat for June delivery, they said.
Japanese corn buyers are expected to stay on the sidelines, breaking with past when they would start the quarterly purchasing for July-September shipment by the middle of April.
This year, they have delayed procurement due to fears that they could face millions of dollars in losses if their cargoes contain Bt10 an unapproved strain of genetically modified corn made by Swiss agrochemical group Syngenta AG.
"I wonder if they start buying corn for July-September shipment by the end of this month, as the Syngenta issue has not yet been resolved," said an official at a grain-trading house.
Japan's rules on genetically modified products would require importers to destroy US corn or ship it back to the United States if it was contaminated with the unapproved GMO strain.
Importers have been asking the Japanese government to be flexible in implementing a zero tolerance policy on imports of unapproved GMO crops, but the government is reluctant to accept the request.
Japanese soya buying should pick up this week because importers are eager to complete purchasing for June shipment before the Golden Week holiday, which runs from Friday to May 5 with a workday in between.
Buyers are more interested in US soya than South American new crops, because US soya continues to hold a price advantage.
But freight rates have shown signs of easing, with sharp drops in the Baltic Exchange Dry index of dry bulk carrier rates in recent days possibly prompting Taiwan importers to bring forward regular tender schedules.
"The trend for the BDI is for it to go lower as China's government cools its economy," an official with the Members Feed Industry Group said by phone from Taipei.
Beijing last week announced it would cut export rebates for steel products to 11 percent in an attempt to cool the sector and is the latest in a string of similar measures in the over-heated metal sector.
"We're looking closely at the freight rates to determine the timing of our next shipment for June 1-15," said the official, who said freight rates on the benchmark US Gulf to Japan route had eased to around US$58 per tonne from $62-63.
The Baltic Exchange has fallen 9.4 percent to 4,381 in the last week, after rising to a record of 6,208 points last December, a six-fold increase since 2002.
But the index is still more than doubles levels in the 1990s and 2000s.
An official with the Great Wall Feed Group in southern Taiwan said MFIG would likely tender this week for a cargo of corn, while Great Wall could possibly seek a shipment next week.
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