New South African corn crop lures buyers in Asia; 600,000 mt traded on day

The emergence of new South African corn for May shipments sparked fervent purchases from South Korea and Taiwan, as buyers capitalized on an inverted market before the harvest of Brazil's Safrinha crop to cover demand for deferred cargoes, according to sources March 9.

Up to 600,000 mt of corn was purchased across nine deals that closed late-March 8, with the most competitive execution originating from South Africa or the Black Sea via Romanian ports.

Taiwan Feed Industry Association, or MFIG, returned to the market and bought 52,000 mt of South African corn for May shipment from CJ International at 219.4 cents/bushel over July (N) and two other Taiwan-based buyers bought two additional cargoes of 52,000 mt of South African corn at similar price levels.

South Korea entered the market and booked six cargoes for July arrival at $325-$340/mt CFR. A summary of the deals is available in the table below. The corn was mostly sold on a worldwide optional origin but market sources believe most should be executed out of South Africa.

Following the deals, South Korea has nearly completed July arrival, booking up to 492,000 mt of corn on an average of 131 days forward.

According to the latest South Africa's new crop report released Feb. 28 by the Crop Estimate Committee, the country has a planted area of 1.63 million hectares for yellow corn and forecasted the 2023 yellow corn production at 7.43 million mt.

In the current marketing year 2022-23 (May-April), South Africa has exported 1.84 million mt of yellow corn up to the week ended Feb. 24, according to data released by the South African Grain Information Service (SAGIS).

South Korea imported 105,000 mt of South African corn in the current marketing year, Japan 605,000 mt, Taiwan 588,000 mt while Vietnam took 353,000 mt, SAGIS reported.

However, port elevation capacity will limit any further exports for May shipments, with the estimates for elevation and port capacity at 350,000 mt, according to sources.

"This position is cheap because it is a mix of new crop and old crop. South Africa also has a sizeable volume of carry-out into the new crop," said a trader.

Most of the grains exported from South Africa is via the port of Durban, according to industry sources.

South Korean buyers capitalized on the inverted market and the availability of South African corn to largely complete July demand, and could now afford to wait for Brazilian Safrinha corn, without much exposure to price movements prior to that.

"It is smart for them to buy now, and also for South Africa to be priced in below US corn and above Brazilian corn to sell May shipments," said a trader.

Source: Industry sources