Philippines and South Korea have bought a total of at least four feed wheat cargoes in the last 24 hours.
Philippines Import Group has booked three cargoes each about 50,000 mt of Australia feed wheat for January-February shipment from ETG and CBH at around mid $340s/mt CFR Oct. 13. San Miguel may also have covered positions for February-April shipments but exact details were unavailable.
South Korea’s Major Feedmill Group booked 65,000 mt of feed wheat from CJ for Feb. 7-March 17 shipment at $354.49/mt including second port premium.
The 120-day UN-brokered Black Sea Grain Initiative is going to end on Nov. 19 and the market is not confident of an extension given the increased tensions.
Without the prospect of Ukraine wheat exports, buyers turn to Australia supplies.
Philippines’ feed wheat trades are trading at close to and even cheaper than corn valuations, sources said.
Platts, part of S&P Global Commodity Insights, assessed January-February arrival corn at $348.50/mt CFR NE Asia Oct. 13.
Corn in the forward curve delivered to North Asia is valued at least $5-$10/mt higher than spot markets due to bullish supply tightness, sources added.
US corn production has been hit by poorer yields, while low water levels in the Mississippi will delay US corn reaching the export markets.
Moreover, on Oct. 11, the Brotherhood of Maintenance of Way Employees Division (BMWED) rejected its tentative agreement with the railroads — an action which reintroduces the possibility of a freight rail workers strike.
Class I railroads have reduced their workforce significantly in recent years and now face a labor shortage. The lack of available labor is the primary factor behind the ongoing rail service problems impacting grain and other shippers.
In Argentina, corn planting is slowest in 10 years due to hot temperatures, according to the Rosario Grains Exchange, or BCR.
With only two weeks left to conclude the early corn planting window, corn planting in Argentina stood at 16.4% of the total forecast area of 7.5 million hectares for MY 2022-23 (March-February) as of Oct. 12 compared with 23.2% a year ago, according to the Buenos Aires Grains Exchange data.
After another week without adequate rains, a part of the initially planned early corn crop fields could be left out of the current production cycle, BAGE said in the report.
China is also geared up to start importing Brazilian corn due to the lack of exports from Ukraine.
The inverted feed wheat to corn spread may lead feed buyers to switch from corn to feed wheat.
Australia’s wheat harvest has just started and the country is expecting another bumper crop though protein quality is expected to be compromised by the higher than average rainfalls particularly in the south and eastern regions.
The market is expecting higher volumes of lower quality wheat which will need to find homes in the animal feed industry.
Logistics may pose a challenge as January shipping slots for Australian exports are limited which would elevate prices, sources said.
Feed wheat cargoes for February shipment onwards were already heard moving to higher ground at around $360/mt CFR Oct. 14 following the flurry of trades.
