Falling U.S. corn prices tempt SE Asian buyers

Falling U.S. corn prices tempt SE Asian buyers

SINGAPORE (Reuter): Indonesia and Malaysia may be tempted to snap up U.S. corn for late-year delivery if prices in Chicago continue to fall, regional traders said.

Buyers from the two countries may decide to lock-up supplies because of concerns that hot weather predicted by longer-term forecasts for the U.S. Midwest may stunt pollinating corn crops in the region sparking a renewed price rally, traders said.

"This worry about prices spiking up may precipitate some forward buying soon," one Singapore-based trader said.

"If the price in Chicago continues to slide some more, you may see some buying interest emerge here," another commodity house dealer said.

Indonesia and Malaysia have not covered their November to December corn requirements and would need up to 450,000 tons during this period, traders said. Thailand is well-covered on corn until the end of the year, they added.

The price of July corn on the Chicago Board of Trade (CBOT) has dropped in the past two days and fell 30-1/4 U.S. cents on Tuesday to end at US$5.01-3/4 a bushel. December was down 12 cents to $3.67-1/4.

Heavier than expected rainfall over the weekend in the U.S. corn belt knocked prices lower, but meteorologists warn that hot and dry weather lays ahead.

This may put further pressure on the U.S. corn crop and reignite a rally that drove corn prices higher last week.

"You've got this heat building up in the U.S. Midwest. People are saying the crop looks very immature. I think there's a bit of growing anxiety here. The pollination of the corn from around the 20th to the 30th (of July) is going to be critical," one trader said.

An executive of an Indonesian feedmill said importers will probably "buy corn for late-year delivery following the drop in Chicago."

In Malaysia, rumors swirled that buyers were ready to lock in substantial purchases for year-end corn stocks due to lower prices.

But another trader in a European commodity house said weak domestic corn prices, particularly in Malaysia, may deter the countries from making any quick forward purchases.

"They're going to wait for much lower prices before coming in," the trader said. "They're not really in a hurry to make forward purchases."

Export business around Southeast Asia remains thin, with fresh rumors that the Chinese may finally come around to selling corn in the region sparking little interest.

"These Chinese corn reports keep blowing hot and cold, and they came up again when prices surged last week. Let's just wait and see if they're going to issue the licenses at all," one trader said.

"That rumor again? There's really nothing from the Chinese end as far as I can see," another trader said.

Traders in Hong Kong reported on Tuesday that thousands of tons of corn moved to northern Chinese ports, in anticipation that the government would lift a 1994 export ban, had been left to rot and will now be moved to feedmills in southern China.