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Analysis: Pakistan to buy wheat at lower
prices
SINGAPORE: With strong signs that the world will produce a
bumper wheat crop this year, Asian grain buyers may
increasingly drag their feet on signing deals in an effort to
put pressure on suppliers to cut prices.
Australia and Canada two of the world’s biggest wheat
exporters are expecting big harvests. In addition, Black Sea
grain, for milling and for feed, is being amply offered at
extremely competitive prices. This abundance is sufficient to
offset a small drop in the US crop and the growing global
supply has nixed any rally attempts in grain futures on the
Chicago Board of Trade.
Fearing a further rise in freight rates, which climbed to
record highs earlier this year, many Asian buyers have covered
their grain needs for more than the normal three-month period.
This has given buyers the upper hand to negotiate for better
prices as they can wait for more favourable terms.
“Prices may come down as the harvest improves,” said Antonio
Moraza, president of Pilmico Foods Corporation, a Philippine
flour milling firm. “I don’t have a requirement until
November.”
One model of patience is China, which has suddenly slowed
buying after rushing to purchase many cargoes from all three
leading suppliers earlier this year, sending a signal to other
Asian buyers that it might be wise to defer going to the
market.
China imported 3.46 million tonnes of wheat in the
January-July period, up more than 2,000 percent from the same
year-ago period. Trade officials expect China to import up to
8 million tonnes of wheat this year.
“It’s possible Chinese buyers may be waiting for lower
prices,” Mark Samson, US Wheat Associates’ vice president for
South Asia, told Reuters.
Suppliers under pressure: The International Grains Council
estimates global wheat output in 2004/05 to rise to 606
million tonnes the highest level since 1997 and compared with
554 million in 2003/04.
The United States and Canada were offering cargoes at about
$200 a tonne, including cost and freight, to Southeast Asia.
Australian wheat was offered a couple of dollars cheaper. On
the other hand, cargoes from the Black Sea region were offered
around $180 a tonne C&F.
Indonesia, Malaysia and Pakistan have bought Black Sea milling
wheat, while the Philippines, which has bought Ukrainian feed
wheat, is pondering buying milling wheat from that region.
Trade officials said Pakistan, which bought Russian wheat for
the first time this year, had put pressure on US exporters to
offer shipments at lower prices when they float their new
tender, expected to be issued some time later this month. In a
Pakistani tender earlier this month, Russian wheat was sold at
$16 a tonne cheaper than other origins, despite concerns from
Pakistani flour millers on quality.
Pakistan will be looking for shipments from November onwards
in its tender, by which time the new Australian wheat crop
would be in, giving a chance to Pakistan to buy at still lower
prices.
“Pakistan is looking to buy big volumes. Anything cheaper will
fly,” said one regional grains trader. “But if freight from
the Black Sea region rises again, you never know.” Shipping
trade officials said freight rates could remain firm from
October onwards. Grain traders are closely watching freight
movements, which would be key to signing new grain deals. “The
recent freight forward agreements levels suggest we should
expect a strong last quarter, although far off from the levels
we saw in the first quarter of 2004,” said Voytek Chelkowski,
managing director of Seamind Pte Ltd., a Singapore-based
shipping services firm.
“Whether the actual rates prove the agreements right remains
to be seen, and if there is anything certain we can expect,
I’d think, it is volatility,” he added.
This week, gross timecharter rates for shipping from the US
Gulf to Japan were at $32,000-$33,000 a day, down from more
than $50,000 a day in January.
t $32,000-$33,000 a day, down from more than $50,000 a day in
January.
Courtesy: Daily Times
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Pakissan.com;
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