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Grain buyers in Asia are likely to hold back purchases this week as they wait for freight rates and prices on the Chicago Board of Trade to ease, traders said on Monday. Japanese corn buyers bought a small volume of the grain last week and are expected to remain on the sidelines this week.
"We've seen slight falls in freight rates last week. Buyers took a wait-and-see stance last week, hoping for a further drop in freight rates," said a Japanese trader. "Business will remain pretty calm this week as there will be few aggressive buyers now, given high corn prices," he said.
Japanese feed makers were estimated to have covered for about 800,000 tonnes of corn for the January-March period. They purchase about 3 million tonnes of corn each quarter. In the Japanese bean market, activity remained slow as domestic crushers had already bought about 50 percent of their requirements for December in the month.
Monthly bean purchases from Japanese oilseed crushers were about 243,000 tonnes on an average this year, down more than 4 percent from last year, as demand shifted to rapeseed. Taiwan grain importers are likely to remain on the sidelines this week, after securing tenders in recent weeks. They also bought some small cargoes in containers.
Lower freight costs and improved quality of corn and beans shipped in containers have been the driving forces behind the shift, according to a recent report by the US Department of Agriculture's Foreign Agricultural Service.
The report quoted traders in estimating that Taiwan is likely to import a combined 1.5 million tonnes of corn and beans through containers in 2006, a 50 percent increase since 2005. Lower costs have encouraged smaller feed millers to import the raw materials directly, rather than buying from the domestic market, the report said.
In other news, traders said they were eyeing a possible wheat tender by the Taiwan Flour Millers Association in coming weeks, although officials at the group said no time or quantity had been set. South Korea's corn buyers are expected to stay on the sidelines this week because many importers had already covered their requirements up to March.
"Last week, South Korean grain importers unexpectedly stepped up buying Chinese corn for delivery as far out as March. They will take a break this week," said an official at a foreign trading house. But some importers are eyeing more corn, anticipating that cheaper Chinese corn would be scarce in the market next year due to higher domestic demand.
"We need to buy Chinese corn aggressively given higher prices in Chicago. Trading houses are refraining from offering corn for shipments from March onwards, but if there is an offer, we will start to buy Chinese corn again," an official at Korea Corn Processing Industry Association. South Korean importers have purchased at least 11 cargoes of corn last week and most of them are likely to come from China.

Copyright Reuters, 2006

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