South Korean and Taiwan importers are likely to tap grain markets with some signs record freight rates might edge lower, although others may chose to wait and see if any downward turn is short-lived.
Japanese corn buyers were believed to have covered about 70 percent of their requirements for July-September shipments, traders said, although record freight rates were keeping many buyers on the sidelines.
"South Korean buyers need to buy corn for October arrival but current freight rates are still not low enough to attract demand," said a trader at an intonation grain house. Panama dry bulk rates, usually for grains and iron ore, have been up more than 50 percent so far this year.
Shipping industry officials in Japan estimated spot voyage fixtures for modern Panama rates for the benchmark US Gulf to Asia route at around $85 per tonne. However, another trader in South Korea put the US to Japan route at between $75 and 76, indicating a slight softening.
It was around $55 a tonne in January. The benchmark Baltic Dry Index, which measures prices for shipping dry commodities, ended at 6,554 on Friday down from an all-time peak of 6,688 as strong demand from China and India was compounded by port congestion in Australia.
South Korea's feed makers have not issued any corn tenders since the KFA had failed on April 17 to buy a total of 495,000 tonnes of US corn for October and November. "KFA will re-issue a tender for the corn if freight rates fall further," said another trader. Korea Corn Processing Industry Association is expected to seek up to 110,000 tonnes of food-grade corn for September arrival this week, the trader said.
A Tokyo trader said imports from the United States may fall this year from a year ago given that Japan has already bought some Brazilian and Chinese origins due to their competitive prices, and imports from Argentina were on the way. In 2006, Japan imported a total 16.9 million tonnes of corn, of that 96 percent came from the United States, government data showed.
In Taiwan, the Maize Industry Procurement Association also known as the Members Feed Industry Group are expected to announce a re-tender for up to 60,000 tonnes of either US or Argentinean corn, traders said.
In regular buying news, the Taiwan flourmills Association has slated a tender for 81,750 tonnes of US wheat for Wednesday, traders said. A trade mission from Taiwan will visit Washington next month and sign a letter of intent to buy US wheat in 2008 and 2009, an industry group said last week. In soyabeans market, South Korea has issued a tender to buy 125,000 tonnes of non-genetically modified soyabeans for 2008 arrival, an official at the state-run Korea Agar-Fisheries Trade Corp said.
The tender was split into five lots of 25,000 tonnes each for arrival between January and July next year at the port of Intone. Japanese soyabean buyers have started purchases for July shipments as requirements for June are fulfilled.
But a trader at a major trading firm said activity was slow in anticipation that the Chicago market may come down from last week's climb to a 2-1/2 year high. "It's weather which determines prices currently. But it seems that the chance is slim for Chicago to clear $8 (per bushel)," a Japanese trader said, citing a slowdown in demand from China. Japanese soya importers typically buy about 240,000 to 250,000 tonnes on average each month.