New York — CFR Asian corn prices hit a new high of $295.40/mt CFR Feb. 17. The last time prices were this high was on Feb. 9 when they were assessed at $294.50/mt, based on Platts data.
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The delivered price of corn rose $9.40/mt on the day and was propelled by the emergence of South Korea's Major Feed Group, which booked a cargo with worldwide origins at that price for June 21 delivery from LDC, as previously reported by Platts.
The last June arrival cargo booked by a South Korean feedmiller was on Feb. 4, when Nonghyup Feed Inc (NOFI) paid $289.39/mt CFR for a cargo of South American corn from Glencore privately. At that point, the March corn futures was at $5.52/ bushel. The same contract settled at $5.5225/bushel on Feb. 16 but MFG paid $6/ mt more for the cargo to be delivered in the same month.
Meanwhile at origination, the April basis offers from Argentina has fallen about 10 cents from 96 cents/bushel to 85 cents/bushel between Feb. 4 and Feb. 16. The selling pace from the Latin country has been brisk as "farmers have been selling decent volumes in anticipation of export tax increase on corn," one Singapore-based trader said.
Surging freight costs have pushed prices higher and market participants have been quoting April-May shipments from Argentina to South Korea at over $50/mt, up at least $2/mt on the day.
Tight Atlantic Panamax market
Low levels of spot tonnage on the US Gulf Coast and the East Coast of South America, and persistent congestion at the Panama Canal, meant freight prices were high on long-duration front-haul routes out of the key grains loading areas. Large numbers of spot fixtures were instead heard fixed with retrodelivery in Singapore or the Far East, for mid-late March laycan cargoes from Brazil and Argentina.
"There were about twenty ships fixed on that run between now and yesterday," said one shipbroker source Feb. 10.
Despite a lull in fixture activity due to the Lunar New Year holiday, the few forward deals that were completed attracted daily rates well above last done. On Feb. 16, the Transocean-controlled Antwerpia, 81,429 dwt, 2012 built, was heard on subjects from Hong Kong for a trip via the East Coast of South America, April 1-4 laycan, at $19,000/d – more than $1,000/d higher than last done, and equivalent to a $/mt rate on a 60,000 mt (plus/minus 10%) corn cargo of almost $47/mt.
As the prices of very low sulfur marine fuels (VLSFO) have risen through the early weeks of February, scrubber-fitted Panamaxes have become more attractive to grains charterers for their cargoes into Chinese discharge ports.
The $/mt price of VLSFO has risen around 11% at both Rotterdam and Singapore since the end of January, forcing charterers to re-evaluate the economics of scrubber-fitted Panamaxes for grains cargoes loading on the US Gulf Coast and the East Coast of South America.
The scrubber-fitted ships, which can burn 3.5% sulfur IFO 380 specification marine fuel but remain in compliance with the IMO 2020 sulfur emissions cap, have become increasingly attractive as the price of VLSFO has increased. The S&P Global Platts Panamax scrubber premium index rose from $1,360/d on Jan. 22 to $1,773/d on Feb. 16 – its highest rate in eleven months.
Traders Kept Offers High On Freight Uncertainty
Some 13 sellers submitted prices into the MFG tender and, despite the buyer indicating that prices above $300/mt were not encouraged, all sellers except CHS and LDC showed prices above $300/mt CFR due to the uncertainty in the freight values.
CHS who showed the next best offer was only at $299.29/mt CFR, $3.89/mt above the tender award.