March 30, 2009
Asian grains demand for feed slows as recession bites
The global financialrecession is translating into some reduction in demand for feed grain across Asia as consumers tighten their belts and manage on less income.
Traders in the region say business is not as brisk as a year ago though demand has held up surprisingly well despite a tougher economic climate.
Nobuyuki Chino, president of Unipac Grain in Tokyo, on Friday (March 27) said Japan''s compound feed industry is facing diminished demand from a conservative stand point this calendar year, seeing a marginally negative growth.
Chino said in Japan''s compound feed industry for calendar 2009 was likely to produce 23.5 million tonnes of feed compared with slightly more than 24 million tonnes last year.
Japan had already purchased about 75 percent of its feed grain requirements for the three months ended June, including 2.2 million tonnes of corn.
South Korean demand for feed grain has been surprisingly firm, traders said.
One trader said demand is picking up as seen in some deals settled last week and this week, but are unwilling to aggressively snap up grains because they expect prices of corn may go down a little bit.
He said many feedmakers were delaying purchases until after Tuesday''s United States Department of Agriculture annual report on US farmers'' planting intentions.
The report is projected to show that US farmers intend to plant record soy acreage this year as input costs are less than crops such as corn.
Analysts polled by Reuters on average expect USDAto peg 2009 US corn acreage at 84.411 million acres, down from 86 million a year ago. Soy acres, on the other hand, are seen rising to a record 79.622 million, up from 75.7 million in 2008.
Last week, South Korean feedmakers bought 165,000 tonnes of US corn for August arrival at slightly below US$207 a tonne.
USDA weekly export figures showed South Korea also bought 110,000 tonnes of US corn a week earlier.
Traders are focusing on China, with debate continuing about the pace at which the world''s No.1 soy consumer would continue to buy stock to add to reserves.
Rumours circulated last week that China was about to release 1 million tonnes of soy reserves onto the domestic market to ease prices, but there was no confirmation of such a move.
China''s Commerce Ministry on Friday (March 27) revised up its estimate of the country''s soy imports for March to 3.8 million tonnes, a 15 percent rise from February.
March imports are set to be third highest for a month after August''s 3.83 million tonnes and a record 4.13 million tonnes in September.
USDA weekly export data showed that China continues to buy US soy as private exporters reported the sale of 110,000 tonnes of US soy to China for delivery during the 2009-10 marketing year.
A Singapore-based trader said there was little sign of China''s demand for soy abating though the country was turning to Brazil for cheaper new crop supplies.
One trader said that though China continues to buy some US beans because of the strike in Argentina, they''re looking more to South American beans from Brazil.
Farmers in Argentina this week withheld grain and livestock from sale in a 7-day protest over soy exports last week.
Grain exports from Australia continue to be hampered by inadequate rail capacity to shift grain from country storage silos to ports, with the problem most acute in the top exporting state of Western Australia.
CBH Group, which operates Western Australia''s four grain export ports, is overcoming the problem by increasing its road transport fleet, boosting its capacity to move grain to port to about 1.1 million tonnes a month from 795,000.
To date 4.9 million tonnes of grain have been exported through CBH''s ports from the state''s 2008-09 crop that totalled 12.3 million tonnes, including 8.9 million tonnes of wheat.
The bulk handler is now accepting bookings for berths at its ports out to August after last month refusing to take any more bookings until a shipping backlog was cleared.
Bookings have been accepted for shipping slots over the six weeks starting from April 20, the first week of new shipping allocation system introduced by CBH to bettter match handling capacity to ship arrivals. CBH says 1.3 million tonnes of grain is expected to be shipped over this period.
Grain ships this week departed for destinations in Indonesia and the Middle East.