Grain importers in South Korea and Taiwan are likely to be quiet this week, sidelined by rising freight rates as dry bulk vessels are in tight supply.
South Korean grain buyers are expected to take a break after making purchases for October and November arrivals for the past few weeks after Chicago prices fell, traders said on Monday.
They said importers will take a wait-and-see attitude for a while before stepping up their purchases again as rising freight rates still show no signs of edging lower. Spot voyage fixtures for modern Panama rates for the benchmark US Gulf to Asia route are being quoted at around $92 per tonne, according to shipping officials in Seoul.
The rates have risen about 70 percent so far this year. "Very little business will be done this week as many buyers have started to go out for the summer vacation," said a trader at an international grain house. "And they will wait for a dip in freight rates." Rates from the US Gulf to Asia continued to climb last week amid a lack of vessels due to strong demand in the Atlantic, trade sources said.
The Baltic exchange's Panama Freight Index, a measure of global dry commodity demand for typical 80,000 tonne cargoes, rose 67 points, or 0.92 percent, to a new record of 7,324 on Friday. In Taiwan, freight rates were also weighing on sentiment, with one trader saying the trend of purchasing via private deals that were shipped in the comparatively cheaper containers, showed no sign of slowing down.
"Importers here are holding back as freight prices have risen so strongly," said a trader at a major international merchant house in Taipei. "We probably won't see much tender action for a few weeks, unless the costs of private deals using cargo containers rises to match dry bulk," he said.
Another Taipei trader said the state-run Taiwan Sugar Corp wouldn't be in the market to tender for its regular mixed US corn and soyabean shipments until the second half of August.
In South Korea's rice market, South Korea has issued a tender to buy 100,000 tonnes of non-glutinous white rice, an official at the state-run Korea Agro-Fisheries Trade Corp said on Monday.
The tender is set under an agreement between South Korea and North Korea in February to give 400,000 tonnes of rice as aid to the hunger-stricken North. Arrival of the rice has been set between August 20 and September 19 at a North Korean port. The tender is due to close at 2 pm (0500 GMT) on August 3.