HONG KONG: Currently about the only source for low-priced wheat for many Asian consumers, China is struggling to bring the grain to ports, causing shipment delays of two to three weeks, the traders said.

Unless the various logistics problems are sorted out, China may not be able to raise ‘03 exports as envisaged, they said, although it should already have wheat sales on the books totalling more than one million tonnes, compared to ‘02 exports of 687,618 tonnes.

The traders were not sure exactly what problems were holding up supplies to ports such as Lianyungang but they didn’t think there was any direct link to the availability of government subsidies for feed wheat exports. “They are still experiencing delayed shipments and I still think they have some internal problems,” said a trader at an international house. Another trader agreed, saying: “They’re working hard. But we are not sure whether they can move everything out to port on time or not...Even if they can sell it, if they cannot ship it out from the interior, what’s the point?” With prices unchanged over the past few months at around $111-$112 per tonne, FOB (Free On Board), Chinese feed wheat is the cheapest for many consumers in Asia, including South Korea, as hardly any offers have been seen from India or the Black Sea. “If they solve the logistics problems, it may not be difficult to achieve (‘03 exports of) 1-1.5m tonnes, though two million tonnes seems a bit optimistic,” said an other trader.

When asked about South Korean tenders last week, the trader said: “We may not execute it (our wheat sales to South Korea) from China. We have kept other options open.”

Over the past week, South Korean feed millers bought about 80,000 tonnes of feed wheat of optional origins for arrival in July at prices between $117-$120 per tonne, C&F. While not sure of the specific reasons for the delays in shipments, some traders pointed out that unlike northern corn-producing and exporting provinces such as Jilin or Liaoning, wheat producing provinces such as Henan had little or no export experience. Custom data showed Chinese wheat exports totalled 137,347 tonnes in the first two months of this year, down 10% from the same ‘02 period.

The data included feed and milling wheat. The traders said Chinese milling wheat, which made a debut in international markets late last year, was offered at unchanged prices of $140-$165 per tonne, FOB, depending on grades.

They added there were quality and quarantine issues with this wheat, although some was still being taken up in the region.

The trader said such quarantine issues had also blocked shipment of Chinese milling wheat to New Zealand, one of the first countries willing to try out the Chinese product. 

REUTERS[ TUESDAY, APRIL 15, 2003 05:30:44 AM ]