Japan mulls US, Argentina origin corn amid lack of Brazil offers for Jan, Feb
http://www.chemnet.com Nov 22,2019 S&P Global PlattsJapanese buyers are weighing the option of procuring corn from Argentina or the US Gulf amid a lack of Brazilian corn for January and February shipments, trading sources said Friday.
Japan, like South Korea, has been a large importer of Brazilian corn in 2019 as US prices have been uncompetitive for the best part of the year.
Brazil's national agricultural agency Companhia Nacional de Abastecimento, or Conab, forecast corn exports for the 2018-19 marketing year at 39 million mt. The trade department data showed that Brazil exported 32.95 million mt of corn over February 1-November 15, as reported by S&P Global Platts on November 19.
For the new crop season that started in September, US farmers continue to face problems due to delays in the corn harvest and quality concerns.
Offers for FOB US PNW No. 3 corn cargoes were heard around 120 cents/bushel over the CBOT March (H) contract and US Gulf cargoes heard offered around 65 c/bu over the same contract. From Brazil, January offers were indicated at 85 c/bushel over the futures Friday. The cash basis premiums have risen about 20% over the past two weeks due to continuing Asian demand.
One trader noted that some US sellers were offering a 10 c/bu discount for No. 4 corn, which was lower quality in toxin levels, broken corn and foreign material or bcfm, etc. No. 3 corn has 4% bcfm, while No. 4 corn has 5% bcfm.
One Japanese trader noted that most buyers would not accept No. 4 corn quality and may instead look to Argentina, where corn quality is much better, despite higher freight costs due to the longer distance. The freight differential for US Gulf and Argentina to Japan is about $6-$8/mt, sources said.
Corn on an FOB Argentina basis for Pananax-sized shipment in January was heard offered in the mid-60s c/bu over the March (H), which was around the same price as US Gulf corn Friday.
Another Japanese traders did not expect Argentinian corn to feature in Japanese end-user procurement, believing they would prefer to buy US corn with a discount on quality. "It is all about the price," he said.
Argentina corn is considered too "hard" for Japanese starch companies and one trading source said he is not a fan of buying from Argentina due to past experience with vessel loading problems and delays. However, the trader added that a discount of 15 c/bu to US corn prices could prompt some Japanese buyers to consider the product.