20000307E.Asia grain: Buyers in Japan, Korea seen sidelined

TOKYO: Japanese buying of U.S. corn and soyabeans will be slow this week as a higher freight market is putting upward pressure on premiums, traders said on Monday.

U.S. corn premiums for April-June shipment were offered on Monday at around 90 cents a bushel over the May contract on the Chicago Board of Trade (CBOT) on a cost and freight (c&f) basis, up from 85-87 cents a week earlier, they said.

U.S. soyabean premiums for May shipment were offered on Monday at 109 cents a bushel over CBOT's May contract on a c&f basis, up from 105-106 cents a week earlier, they said.

"Given the current freight market rates, we don't want to offer U.S. corn at a premium below 90 cents. But clients are resistant at such high levels," said a Japanese trading house official. "It will take more time before we can conclude a sales agreement."

Japanese users have so far covered 70-80 percent of their corn needs for April-June shipment. Traders expect the remainder to be covered by the end of this month.

Japanese corn needs for second-quarter shipment are estimated at 4.1 million tonnes. For shipment in the first quarter, Japanese purchased a total of 4.0 million tonnes of corn.

As for U.S. soyabeans, Japanese users are seen to cover about 10 percent of their needs for May shipment.

As for South American crops, Japanese soyabean buyers have made deals to import over 400,000 tonnes of Brazilian new crops for March-May shipment, traders said.

Japanese traders have so far purchased some 170,000 tonnes of corn and more than 130,000 tonnes of milo from Argentina for April-June shipment, traders said. In the freight market, rates for Panamax-class vessels between the U.S. Gulf and Japan for shipment in the second quarter were indicated at around $24.50 a tonne, up from $23.50 a week earlier. Shipping agents are bracing for further rate hikes as the South American export high season is approaching.

KOREANS CONCERNED ABOUT INDIAN SOYAMEAL SHIPMENTS

Most South Korean grain importers will likely stay sidelined this week, while concerns about Indian soyameal shipments are mounting after a local supplier failed to deliver one cargo by the end of February due to high prices, traders said.

"This week may be quiet as most local feed milling companies are believed to have covered their needs for September arrivals," said a trader with a foreign grain firm in Seoul.

The trader said worries about soyameal shipments from India have recently flared up after one local trading house failed to deliver a 12,000-tonne soyameal cargo by the end of February.

The cargo had been sold at about $170 a tonne, C&F, in early December, but the supplier was unable to source the soyameal as Indian soyameal prices have recently risen to as much as $220 a tonne, he said.

Some traders, however, said the Korea Corn Processing Industry Association (KOCOPIA) was expected to seek about 105,000 tonnes of U.S. No.2 yellow corn and Argentine corn, if corn prices fall below a target level of about $115 a tonne, C&F.

The amount was expected to split into two cargoes of 52,500 tonnes each -- one for arrival by August 5 and the other by August 15 to the western port of Inchon, a trade source said.

One South Korean flour milling firm was expected to start seeking 20,500 tonnes of U.S. wheat next week for May/June shipment, said a trader with a local flour milling firm. -Reuters