RI buyers may rush into corn markets

RI buyers may rush into corn markets

SINGAPORE (Reuter): Malaysian and Indonesian buyers will probably jump into the market after the overnight release of a bullish U.S. Department of Agriculture (USDA) report which sent corn futures prices soaring, dealers said on Wednesday.

The USDA estimated on Tuesday that U.S. 1997 corn production would be around 9.276 billion bushels, sharply below its forecast of 9.7 billion in July.

The September corn futures contract on the Chicago Board of Trade (CBOT) closed the 12-cent limit up, ending at US$2.61-3/4 a bushel. December was also up 12 cents at $2.65-1/4 a bushel.

"I was very surprised by the numbers. It's already spooked buyers here," a dealer for a U.S. commodity house told Reuters.

"Everybody was surprised. I don't think people can hold back on buying too long. We're a long way from the next crop report and we're coming into September when they have to make decisions on their last quarter needs," anther dealer said.

Prices of U.S. corn coming into Southeast Asia rose sharply and were seen by the trade at around $145-$150 a ton C&F on a Panamax for October-December shipment against a quote last week of $138-$142 a ton C&F.

One analyst was a bit more cautious about buyers chasing corn supplies, saying they would probably come in if prices dipped.

"I don't think consumers are going to run and go crazy. I would be surprised to see people chasing corn," he said. But most of the trade believes otherwise.

"This thing will scare people. It will definitely spook the buyers," one said.

Traders said Indonesia, which recently bought around 150,000 tons of corn mostly from China for September delivery, may need to buy another 250,000 tons because of a drought which appears to have blighted the crop on Java.

The crop has taken a pounding from dry conditions believed precipitated by the El Nino weather phenomenon.

"The Indonesians are already looking at new crop corn. If they start buying, that would be the number they're looking at -- 200,000 to 250,000 tons," one dealer said.

Malaysian feedmills will also be looking to pick up an estimated 100,000 tons of corn for September-November delivery and a further 150,000 tons for December.

"The 100,000 tons for September to November is the minimum the Malaysians will need. I think it will be more than that," a dealer said.

"The Malaysians are not going to be happy about this. They should be buying soon," a trader added.

Thailand, on the other hand, is believed to be close to securing most of the 150,000 tons of duty-free corn the government has allowed into the country.

"Their corn harvest is coming in so they will not probably need any new shipments immediately," one trader said.

One grains analyst said buyers in Malaysia and Indonesia would try to get Chinese corn, although supplies from there are seen drying up towards the end of the year.

"For November-December, they will have to look at U.S. corn," a dealer said. A drought in China would also curb its corn exports going into next year, he added.

In the oilseeds business, bearish USDA numbers and expectations of a bumper soybean harvest in the U.S. drove buyers to the sidelines.

The USDA forecast a record soybean crop of 2.744 billion bushels, up from trade expectations of 2.607-2.731 billion.

"I'm pretty comfortable with the bean number. The rain is there, the plants are fine. I think it's (the soybean crop) going to be bigger," a dealer said.

"The buyers will say the USDA figures is bearish and ask for really low prices," another trader said. "They can sit back and wait for prices to come closer to their level."