Singapore — Asian corn and soybean prices spiked as corn prices on the Chicago Board of Futures soared on poor planting progress in the US amid persistent wet weather.
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CFR Northeast Asia corn prices reached a year-to-date high to close at $213/mt on May 29. The last time CFR NE Asia corn price was higher was on August 20, 2018 at $213.50/mt, based on S&P Global Platts data. CFR China soybean price was assessed at a year-high of $402.71/mt on May 29. The last time CFR China soybean prices were higher was on November 23, 2018 at $404.82/mt, based on Platts data.
On May 10, three cargoes totaling about 200,000 mt of feed corn traded into South Korea, between $184.68/mt to $186/mt CFR. On Wednesday, trading sources reported a 65,000-mt cargo booked for December arrival at $213.99/mt CFR, up 15.5% or $28.80/mt higher.
The buying group said that they will be replacing some of their corn demand with DDGS, as corn prices continued to surge. The group was targeting to double its monthly DDGS procurement.
As a result, the same feed consortium booked three containers for prompt shipment early Wednesday. Two containers of 2,000 mt were booked at $220/mt CFR Incheon and $212/mt CFR Kwangyang for arrival in July 30. The third container of 3,000 mt was booked at $214.50/mt CFR Kwangyang for arrival in August 30.
A narrowing price differential between corn and feed wheat has also attracted South Korea feed buyers into the feed wheat market recently. Feed buyers focusing on poultry and swine are more flexible in switching between corn and feed wheat, compared to those in the cattle industry as the latter has an inelastic demand for feed wheat for pelletizing purposes.
The feed buying group said they were willing to switch to feed wheat when the prices were higher by 8% or less. For other feed groups, the threshold may be higher at 10-20% above corn prices.
Also late Wednesday, the group purchased a 66,000-mt cargo of new crop Black Sea feed wheat at $216/mt plus $1/mt second port discharge for November 5 arrival.
Just a day before feed wheat prices were about $7.5/mt lower, another buying group in South Korea bought two 60,000-mt feed wheat cargoes from the Black Sea, at $207.9/mt for Aug 7-28 shipment and $208.95/mt for October 7-26 shipment, both prices inclusive of second port discharge.
The spike in Asian grains was led by the jump in corn futures in Chicago. Front-month delivery CBOT corn futures have risen 93.75 cents from May 10 to May 30 at $4.36/ bushel, the highest level since June 6, 2018.
58% of the intended US corn acreage has been planted through Sunday, the Department of Agriculture said Tuesday. This level was 32 percentage points below the five-year average for this week and the year-ago planting pace, S&P Global Platts reported earlier. Wet weather conditions have also impacted soybean planting in the US. Only 26% was planted, far below the average of 66% in normal years, according to the USDA crop progress report on May 28.
"Soybean situation is more uncertain than corn. It is too early to expect loss of crop output this year, because it is still possible for farmers unable to seed corn to shift to plant soybeans at a later stage," a trading source said.
-- Ivy Li, firstname.lastname@example.org
-- Edited by Nurul Darni, email@example.com