East Asian importers are holding off buying corn for 2005 arrival, hoping freight costs will ease and prices will dip as more corn is offered from China, regional traders said on Monday.
But Japanese soyabean importers and Korean flour millers are gearing up for last-minute soyabean and wheat purchases this week for December arrival, traders said. "Most of our members think freight rates have reached a peak at $60 levels, and we are waiting for them to fall," said an official at the Korea Corn Processing Industry Association.
Modern Panama rates for the benchmark US Gulf to Japan route were at $65-$66 a tonne last week, after topping the $60 mark the previous week for the first time since May. Starting late last year, Panama rates surged to a record $75-$80 in February, only to slump below $40 by June amid expectations that demand from China was fading.
They have gradually firmed in recent weeks. Japanese buying of corn, mostly for January-March arrival, is expected to be slow this week as traders eye freight costs. "Buying (for the first quarter) began about 10 days than usual and I think traders may want to take a break and see how things turn out this week," a Japanese trader said.
Crude oil prices dropped 8 percent to a three-week low last week, raising hopes that freight rates may ease, he added. But oil prices bounced back on Monday, climbing to near $52 a barrel on worries about thin winter fuel stocks.
Most South Korean feed makers need to buy Panama-sized corn cargoes for February arrival, except Nonghyup Feed Inc., which needs three Panama corn cargoes for January.