Grain importers in Japan and South Korea are holding off buying this week ahead of a major US crop report that could put pressure on prices, with high freight rates also dampening buying interest, traders said on Monday. Cheaper exports of Chinese corn weighed on the minds of buyers, while in Taiwan, importers will be seeking regular shipments of wheat and soyabean as demand for feed picks up before the Chinese New Year celebrations next year, said traders.
Japanese and South Korean buyers will wait for the USDA's report due on Friday, anticipating corn and soya prices could fall if the United States raises its crop estimates.
"We are expecting soyameal prices to fall further, pressured by good harvests in the United States," a senior trader at Nonghyup Feed Inc told Reuters, adding that the company had no immediate plan to issue any grain tenders this week.
Trade sources said on Friday that analytical firm Inform Economics had estimated this year's US corn crop at a record 11.750 billion bushels, above the USDA's October estimate of 11.613 billion bushels.
Inform also forecast the US soya crop at 3.150 billion bushels, above the USDA's 3.107 billion-bushel estimate, but below other market estimates of 3.3 billion bushels. One Japanese trader estimated feed makers had covered about 30 percent of their total corn needs for January-March shipments, or roughly 900,000 tonnes, by the end of last week.
Most South Korean feed makers only need to buy for February arrivals and onward, while Nonghyup Feed needs to buy only one cargo for arrival in late January, traders said leaving traders well able to wait for lower corn offers.
Greater availability of Chinese corn was also making South Korean corn importers more reluctant to buy, traders said.
China has sold a number of cargoes to South Korea and Malaysia recently as a bumper crop and high shipping costs have restored its competitive edge against US corn, which must travel further.
US corn was quoted at more than $150 per tonne on a Cost & Freight (C&F) basis for January arrival in the Korean markets, while Chinese corn was at around $145 per tonne C&F, traders noted.
High freight rates were also keeping buyers sidelined, after dry bulk rates for Panama-sized vessels soared to 5-month highs in late October on an expected record crop harvest in the United States and strong Chinese demand for minerals.
"(Feed makers) are likely to wait for some time before making additional purchases, as they hope freight rates to come down to affordable levels," a Japanese corn trader said. Spot Panama rates for the benchmark US Gulf and Japan route came off the high of $65-$66 a tonne following the interest rate rise in China in late October.
But rates were still above $60 on Monday, nearly $10 higher than levels one month. "Freight rates have already reached their peaks, (and are) likely to fall," said a South Korean trader.
In regular buying activity, Taiwan's millers will tender for 43,000 tonnes of US wheat on Tuesday, said an official.
The Kaohsiung Division of the Breakfast Soyabean Procurement Association is also likely to announce a tender for 56,000 tonnes of US soyabeans this week, said a group official.