CBOT ‘collapse’ sparks 400k mt South Korea corn tender flurry

5 Aug 2020 | Tim Worledge

The “collapse” in Chicago corn futures has sparked tender buying interest from two of South Korea’s giant feed-making associations and its corn-processing association, trade sources told Agricensus Wednesday.

Nonghyup Feed Inc (NOFI) tendered for four cargoes while Korea Feed Association (KFA) looked for one position into the port of Busan - on cargo sizes of up to 69,000 mt - and Kocopia was looking for one 55,000 mt position.

Early signs suggested that NOFI bought just one of the four positions, with KFA picking up a second cargo, while sources late in the day suggested Kocopia had passed, underscoring the ongoing price sensitivity for end users.

The interest was catalyzed by fresh falls in corn futures. Investors in the US agriculture complex responded to data showing a large, healthy corn crop nearing harvest with heavy selling that shaved 10 cents, or around 3%, off the value.

Of NOFI’s four positions, two were for arrival in December 2020, with two for arrival in January 2021 - the first signs of buying for the new calendar year.

US Pacific Northwest was initially not listed as an origin for either feed corn tender - both associations were instead targeting US Gulf, Black Sea, South Africa and South America.

But NOFI appeared to have updated its documentation to add the origin back in, while KFA ultimately bought an ex-PNW cargo.

NOFI’s first position, for December 5 arrival, invited offers from South America for October 8-27 loading, the Black Sea and the US Gulf for October 10-November 1 loading and October 18-November 6 loading basis South Africa.

PNW loading was for November 2-21 dates, according to documents seen by Agricensus, with Cargill thought to have sold up to 69,000 mt at $197.80/mt CFR for either South American or South African origin.

Position two, for December 10 arrival, invited offers from South America for October 13-November 1 loading, US Gulf and Black Sea on October 18-November 11 loading, South Africa on October 23-November 11 loading and PNW on November 7-26 dates.

The final two positions sought 2021 arrivals, with position three expected to arrive on January 5 and offers invited for November 8-27 loading basis South America, November 13-December 2 for US Gulf and Black Sea, November 18-December 7 for South Africa, with PNW for December 3-22 loading.

Position four was for January 10 arrival, with offers for South America-loading invited on November 13-December 2 basis, US Gulf and Black Sea on a November 18-December 7 basis, South Africa on a November 23-December 12 basis and PNW on a December 12-27 basis.

Virtually all offers for those positions came in at over $200/mt, with the association ultimately passing. 

KFA was seeking 50,000-69,000 mt of corn for November 15 arrival, inviting offers from South America for September 17-October 6 loading, US Gulf and Black Sea for September 22-October 11 loading and September 27-October 16 for South Africa loading.

The association is believed to have bought from Pan Ocean at $191.86/mt, with the seller changing the arrival date to November 5. 

Finally, Kocopia tendered for one cargo for November 25 arrival, with the association targetting food-grade corn for human consumption.

Shipment was invited on a Brazil basis for September 25-October 15 loading, US Gulf and Black Sea loading on October 1-20, October 5-25 for South Africa and finally October 20-November 10 for US PNW, according to the documents.

“Chicago collapsed, today is a busy day in Korea... I suspect NOFI may not buy all four cargoes as FOB premiums might have gone up to reflect the drop in flat price and also freight,” one trade source told Agricensus earlier on Wednesday.

While corn futures have come under pressure while investors consider expectations of the US delivering one of its biggest corn crops in history, the low futures price has encouraged farmers globally to hang on to corn, driving up basis prices in key origins such as Brazil and Argentina.

Alongside that, firmer freight values mean that, despite the falls on corn futures, delivered prices have proved more resilient - the Agricensus CFR South Korea assessment shed just 2% over the course of July to be assessed at $191/mt on Tuesday.

That compares with an 11.6% fall on the September corn future over the same time frame.

For more information on South Korea buying, please see our Tender Dashboard.

Updated to add in PNW dates, confirm Kocopia tender and provide details on NOFI, KFA results.