Corn, Wheat in Chicago Rebound as Importers Rush for Supplies

By Jae Hur

Feb. 12 (Bloomberg) -- Corn, soybeans and wheat rallied for the first time in three days as importers including Japan, South Korea and Egypt sought supplies before freight costs jump further.

South Korea issued tenders to buy 165,000 metric tons of corn and 55,000 tons of soybean meal for feed production today. Japan bought 132,000 tons of milling wheat, including 86,000 tons from the U.S, and Egypt plans to buy at least 55,000 tons of wheat. Grains were also supported on concern port congestion may delay wheat shipments from Australia.

“Overseas buyers are concerned about surging import costs following sharp increases in freight rates,” said Tomokazu Amano, research team chief at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo. “They are likely to rush for purchases while corn and soybean prices stay at current cheaper levels.”

Corn for March delivery was up 0.5 percent at $3.705 a bushel in electronic trading on the Chicago Board of Trade as of 2:24 p.m. Singapore time. The most-active futures are down 54 percent from a record $7.9925 on June 27.

Soybeans for March delivery gained as much as 0.5 percent to $9.8325 a bushel before trading at $9.79. Futures have declined 40 percent from a record $16.3675 on July 3.

The Baltic Dry Index, a measure of shipping costs for commodities, rose for a 17th straight day as demand to ship coal and iron ore boosted capesize vessel rates to a four-month high.

Freight Jumps

The index rose 4.1 percent to 2,055 points yesterday, according to the Baltic Exchange. The gauge has more than doubled this year after collapsing a record 92 percent last year as demand for raw materials fell and the world economy slumped.

Wheat for March delivery added 0.4 percent to $5.4525 a bushel at 2:22 p.m. Singapore time after falling 2.3 percent yesterday. Prices have tumbled 60 percent from a record in February 2008.

Wheat exports from Australia, shipping its biggest crop in three years, may be delayed because of port congestion after the nation opened the market to multiple traders.

There are at least 19 vessels waiting to load grain from ports in Western Australia, the biggest exporting state, according to Bloomberg calculations. CBH Group, the state’s biggest grain handler, told customers it can’t take orders for February or March and temporarily halted April bookings, Colin Tutt, general manager of operations, said in an e-mail.

“If it lasts longer, this will help support Chicago wheat prices as buyers may have to turn to the U.S.,” said Park Yang Jin, business department senior manager at Daehan Flour Mills Co., Korea’s largest milling wheat importer.

The area of China’s wheat crops affected by the worst drought in five decades has shrunk in size by 25 percent since the peak of the disaster, Wei Chaoan, vice minister of agriculture said today. The area of affected “crops in eight main growing regions declined,” Wei said. At the moment, 40 percent of wheat crops still face drought, he added.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net