Spurred by new crop arrivals and the removal of an export ban, Asian grain buyers are rushing to seal deals for Indian corn and soymeal, and Australian wheat, as suppliers offer competitive prices to trim bulging stocks.
As prices on the Chicago Board of Trade eased, Japan sought 100,000 tonnes of US wheat and Taiwan eyed purchases of more than 84,000 tonnes of corn, while South Korean feedmakers snapped up 55,000 tonnes of wheat for January shipment. "We can't help but think that lower prices are starting to build demand in markets that worked hard to ration demand over the past one to two years," said Richard Koch, managing director of farm advisory firm Profarmer.
Chicago wheat lost 21 percent last month, while corn fell 18 percent and soybeans 11 percent in the same period, prompting grain importers, who have been deferring purchases in the hope that new arrivals would pressure prices, to step into the market.
"People can't afford to hold inventories. So in various parts of the world where they're carrying stocks, you are getting a lot of pressure to dispose of those stocks," said Brett Cooper, a trader at MF Global Australia Ltd.
In Australia, the wheat harvest gathered pace in the northern grain belts, while dry weather in the south-east saw the government cutting its forecast for the 2008/09 harvest by 11.4 percent to 19.91 million tonnes. Forecasts for Western Australia, the country's top exporting state, were boosted by 28 percent to 7.8 million tonnes, following rains late in the growing season.
Cooper said there was strong demand for high protein wheat but less interest in lower quality wheat. Iraq's state grains board purchased 100,000 tonnes of Australian high protein milling wheat in a tender that closed on Sunday. South Africa bought 30,000 to 50,000 tonnes and Indonesia bought up to 100,000 tonnes of Australian prime milling wheat.
Koch said Australian wheat should soon enter Middle Eastern markets where it was sought for its quality. In the corn market, sales of Indian-origin grain gathered pace. Traders said deals for export of about 100,000 tonnes of the new corn crop had been signed during the last two weeks with Bangladesh and some other countries in Southeast Asia.
They said buyers were attracted by lower prices. The South Asian supplier, which exported about 3 million tonnes of corn in the 2007/08 marketing year, imposed a ban on exports in July until October 15, so as to ensure domestic supplies. In addition, Indian soymeal exports are also gaining momentum as the soybean harvest gets underway.
Overseas sales are likely to climb to a record 6 million tonnes in the crop year to September 2009 on strong demand and an all-time high soybean production of 12 million tonnes. "Indian meal is getting quite cheap at $310 to $315 per tonne bulk as supplies increase," said a Singapore-based trader. In one deal this week, India sold 12,000 tonnes of soymeal to South Korea at $310 per tonne, including cost and freight. Prices are $50 lower than meal delivered from Argentina and Brazil.
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