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South Korea books feed wheat below $300/mt for first time since July 2021

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South Korea books feed wheat below $300/mt for first time since July 2021


Sharpest feed wheat trade in South Korea in calendar year 2022 at $327-328/mt CFR

Bearish fundamentals weigh on global wheat prices

Corn prices supported by China's demand for Brazilian crop

  • Author
  • Vivien Tang    Melvin Kwok
  • Editor
  • Alisdair Bowles
  • Commodity
  • Agriculture

South Korea's Feed Leaders Committee booked a feed wheat cargo for late-September delivery at $299.90/mt CFR March 22, the first feed wheat trade into South Korea at below $300/mt CFR for 19 months, S&P Global Commodity Insights data shows.

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The last time feed wheat was traded under $300/mt CFR was when COFCO sold 65,000 mt of Black Sea feed wheat to FLC at $293.74/mt CFR on July 27, 2021.

The sharpest feed wheat trade to South Korea last year was 55,000 mt of Indian wheat sold to Nonghyup Feed Industries, or NOFI, at $327.44/mt CFR in February 2022.

The feed wheat-corn spread for September delivery is now inverted, following a feed corn trade to Korea Feed Association (Busan section) at $308.49/mt CFR March 22.

Wheat buyers in Asia grappled with soaring prices in 2022. The Russia-Ukraine war, which broke out in February, abruptly cut off Black Sea wheat exports. Then, following India's wheat export ban beginning May 13, 2022, wheat prices surged to a high on May 18, 2022.

Platts, part of S&P Global, assessed Australian Premium White at $473/mt FOB and Australian Standard White at $441/mt FOB on May 18, 2022.

Prices eased as Australia's bumper wheat crop in the 2022/23 marketing year (October to September) promised a large low-protein crop thanks to La Nina. S&P Global's trade records showed that several destinations in Asia stepped up their feed wheat purchases, capitalizing on the abundance of Australian feed wheat.

Market sentiment became increasingly bearish following successful extensions of the Black Sea Grain Initiative since its introduction in July 2022. Black Sea wheat flows re-entered Asia, and cheap, plentiful Russian wheat flooded the global markets, weighing on prices.

Feed wheat deals continue to pressure Brazil new crop corn prices into South Korea for September arrival onwards. KFA Busan bought 68,000 mt of South American or South African corn for Sept. 5 arrival position from ADM at $308.49/mt CFR with a $1.50/mt second port charge, according to sources. The cargo has a full July shipment window from South America, which allows for Brazilian new crop to be priced in more competitively, according to market sources.

"It looks like corn keeps on getting competition from feed wheat," said a trader, affirming that corn is trading at a $10/mt premium to feed wheat on an arrival basis.

Another trader said that China's demand for Brazilian corn is a major factor in supporting the corn prices.

Platts assessed Australian Premium White at $314/mt FOB and Australian Standard White at $290/mt FOB March 23, S&P Global data showed. Corn CFR North East Asia was assessed at $319.50/mt March 23.