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Brazil soy delays may cause tight supply

TOKYO: Shipment delays from Brazil, the world's second largest producer, could cause supplies of soybeans and corn to tighten in East Asia and lead top regional buyers to replace some prompt cargoes with US shipments, traders said on Monday.

The impact of the delays was amplified by China's recent hefty purchase of Brazilian soybeans and because other Asian importers have been delaying their buying until the last minute to avoid runaway shipping costs resulting from the US-led war on Iraq, traders said.

"At some Brazilian ports, it now takes about two to three weeks to load soybean cargoes," said an oilseed trader with a leading Japanese trading house. "If the shipment delays last long, we have no choice but to buy more US soybeans."

Japan, which buys 400,000 tonnes of soybeans each month for food and crushing, has already begun seeking oilseed for June shipment.

The trader attributed the shipment delays to recent rain in Brazil and a five-day strike for higher pay by Sindicam, a Parana state truckers union.

He also said some farmers in Brazil have been putting their sales of new crops on hold to hedge against an expected jump in the country's inflation rate as oil import prices rise. Elsewhere in Asia, an official with South Korea's CJ Corp played down the shipment delays but Taiwan grain buyers, who rely mainly on US producers for their feedstuff supply, said they might still be impacted if port congestion in Brazil does not improve.

"The Brazilian soybean cargo we sealed earlier has yet to begin loading, and if the port's jam is not resolved soon, there might be a supply problem," said a Taipei trader.

Taiwan imported some 2.5 million tonnes of soybeans last year, with 281,000 tonnes or 11 percent coming from Brazil.

Soy truckers using Brazil's main grain port of Paranagua ended a five-day strike for higher pay on Thursday night and port warehouses began receiving about 150 trucks an hour, officials from the port and the truckers union said on Friday.

During the strike, Sindicam truckers in Parana had blocked other drivers from unloading at the port warehouse, causing a 120 kilometre (74 mile) backup of trucks carrying Brazil's record 50 million tonne soy crop.

There was also talk last week that China had bought about two panamax cargoes of US soybeans for prompt shipment from the Pacific Northwest to replace some of its delayed Brazilian soybean cargoes, a Tokyo shipping broker said.

With higher dry bulk freight rates, purchases of corn and soybeans by major East Asian importers were expected to remain subdued this week, except for prompt shipment, traders said.

Indications of modern panamax voyage rates for the benchmark US Gulf to Japan were more than $30.00 a tonne for prompted shipment. The level is the highest since October 1995 when an average fixture rate was about $31.00 a tonne.

Most Japanese importers will be closely watching Monday's key plantings and quarterly stocks reports by the US Department of Agriculture to decide whether to start covering their corn needs for July-September shipment, traders said.

Taiwan's corn importers are likely to seek a cargo this week for May shipment, while two South Korean groups may jointly seek one panamax-sized US No.3 corn cargo for late June arrival or mid-July arrival for feed, Asian traders said.

They said state-owned Taiwan Sugar Corp, whose businesses include hog farming and oil crushing, was expected to issue a tender this week for a combined shipment of US corn and soy.-Reuters