South Korean and Japanese corn and soyabean importers will be wary of buying actively this week as surging wheat prices and falling global supplies were boosting prices of other grains.
Fears of further reductions in the drought-hit Australian wheat crop sent wheat futures on the Chicago Board of Trade up by their daily trading limit of 30 cents a bushel on Monday and then up another 30 cents in Asia on Tuesday.
High wheat prices have been lifting corn and soyabeans, making Asian importers less enthusiastic about purchasing in large volume when freight costs are also at high levels. But the situation could change if prices fall back.
"Wheat prices continue to rally but we think the soaring prices are due to technical factors, not just fundamental reasons," said a South Korean official at a flour miller.
"We will wait a bit, as we hear that wheat prices could fall soon," the official said. South Korean corn buyers are also planning to delay purchases until grains markets settle down.
CBOT corn futures also hit a fresh two-year high. "Wheat prices are distorting the whole grain market. We will delay the purchase of corn until prices retreat," said an official at Nonghyup Feed Inc.
Japanese corn buyers were steadily covering their requirements for the first quarter of next year after completing more than 90 percent of their requirements for the current quarter. Traders estimated that Japanese feed makers had bought about 550,000 tonnes for the January-March period by late last week, which is about 18 percent of their quarterly requirement of about 3 million tonnes.
"Surges in wheat prices are clearly pushing up corn and soyabeans, but this is making importers very careful about buying now," said a Japanese corn trader.
"Japanese traders will have to reluctantly complete their requirement for the first quarter. High freight costs and rising prices are making them very nervous."
In soyabeans, Japanese oilseed crushers are looking to buy US soyabeans for December shipment. Each month, they buy about 258,000 tonnes of soyabeans.