Asian grains buyers flock to market on heels of Middle East ceasefire

Asian grains market saw a flurry of tender activity April 8 after US President Donald Trump announced a two-week ceasefire in the Middle East war late April 7.

Feed buyers from South Korea entered the market with feed corn tenders for July 15 and July 30 arrival, and a soybean meal tender for Aug. 3 arrival, according to multiple Asian grains traders. Another group of feed buyers will tender for July 15 or July 20 arrival feed corn April 9, said the same sources.

South Korean feed buyers had been absent from the corn market for over a month, with the last tender issued Feb. 28, based on trade data by Platts, part of S&P Global Energy.

A group of South Korean flour millers also entered the market April 8, issuing two international buy tenders for US milling wheat across August to September shipment, according to two Asian wheat traders.

Southeast Asian buyers also entered the market to extend feed ingredient coverage, with a group of Philippines buyers seeking offers of ASEAN-origin corn for spot shipment, while a group of Thai feed millers invited offers for feed wheat across August to December shipment.

List of buy tenders announced or closing April 8:

However, Asia-based grains traders cautioned that volatile freight rates could still play a role in the near term as the market awaits clarity about shipping through the Strait of Hormuz, on top of the progress in peace talks between the US and Iran.

More competitive grains pricing could also be hindered by other factors, such as the foreign exchange market. The US dollar weakened following Trump's ceasefire announcement, said several Australian traders.

The Australian dollar has surged past 70 US cents after two weeks of relative weakness. At the time of publishing, the Australian dollar was trading at 70.4 US cents, up 1.02% from the previous session April 7 and 0.89% week over week.

While the impact of a firmer currency will take time to eventuate, freight is still expected to be the primary driver of delivered grains prices to Asia, with an immediate decline in freight rates unlikely to occur, according to multiple Asia-based trade sources.

"Freight is not on the high side recently [in Asia], so I doubt it would collapse after the ceasefire," said a Southeast Asian flour miller.

"Freight rates are still all over the place. [The AUD strength] it won't impact immediately. Freight still remains the main driver of higher prices," said a Perth-based trader.

Another Perth-based trade source said, "AUD jumped this morning on the ceasefire, so they may have an impact in the coming days. Will see what Trump has in store in the next few weeks."