S Korea joins buying spree for Black Sea new crop feed wheat

South Korea, attracted by new crop Black Sea feed wheat prices, has followed Thailand and the Philippines to join the buying spree amid falling global wheat prices.

South Korea's Nonghyup Feed Inc. (NOFI) purchased 65,000 mt of feed wheat Thursday at $208/mt CFR, plus $1.25/mt second port premium, from China Oil and Foodstuffs Corporation (COFCO) for cargo arriving September 10.

This was following Major Feed Group's purchase on Wednesday for 68,000 mt of feed wheat at $209.90/mt CFR, including second port premium, from Louis Dreyfus Co. for September 5 arrival.

South Korea's Feed Leaders Committee (FLC) is also privately seeking new crop Black Sea feed wheat, but no purchase has been made yet.

The Philippines was the first in eastern Asia to move on new crop feed wheat purchases, according to S&P Global Platts data. Chicago July wheat futures have dropped 8% since February 21.

"It's a bloodbath. You want to sell more than buy anything in this current landscape – the risk to profit trade off makes sense," said a trader.

The first two new crop sales were made by ADM and Agrocorp to the Philippines' Import Group on February 27 for 56,000 mt of feed wheat at around $222-$223/mt CFR and $216/mt CFR for June 18-July 8 and July 2-22 shipment, respectively.

Following which, Thailand's Betagro bought 60,000 mt of new crop feed wheat from Midstar at $213.50/mt CFR Linerout Bangkok for shipment in July. On March 4, Thai Feed and Milling Association bought two feed wheat cargoes shipping in July at $211/mt CFR Lo Bangkok. The sellers were Agrocorp and Al Ghurair for 58,000 mt and 61,000 mt, respectively.

Thailand's Feed and Milling had passed its buy tender on Wednesday for September feed wheat shipment, with the sharpest offer between $210-$211/mt CFR Lo Bangkok, traders said. It was seeking prices closer to $200s/mt CFR Lo Bangkok, one trade source said.

Uncertainty in consumption of end-products, both locally and via exports, due to an evolving coronavirus pandemic, was also a reason for the buying consortium to defer the forward purchase, another source said.

"Demand is uncertain. In this landscape, they won't cover new crop so quickly. Whatever residual demand in old crop may be pushed further out," a trader added.