October 27, 2014
Vietnam importers cancel deliveries of corn and soy ordered at higher prices
Vietnamese feed millers are refusing to honour import orders negotiated months ago for 200,000 tonnes of corn and 150,000 tonnes of soymeal as prices have since dropped by 25% to 35%.
The situation is "horrible," a trader in Singapore was quoted by a media outlet as saying. "Some ships are still waiting as buyers are renegotiating deals."
Prices have dropped so much that Vietnamese buyers are no longer willing to take the cargoes, the source said.
Majority of the affected shipments is from Brazil and Argentina, main suppliers to Vietnam where consumption of high-protein meat products has been going up with rising incomes.
The situation is expected to drag corn and soymeal prices further down and cause suppliers to chalk up huge losses, industry observers say.
Global prices of corn and soy have plummeted to record lows during the last three months due to bumper harvests by the US and other major South American producers like Brazil and Argentina.
News reports say feed millers in Vietnam are currently being offered Brazilian corn at US$200 a tonne in containers, down from US$275 they promised to pay three months ago for a panamax cargo which typically carries 50,000 to 60,000 tonnes.
For soymeal, the price drop is steeper with cargoes this week being quoted at US$475 a tonne, down US$100 since the deals were signed in July-August.
In the cash market, Brazilian soymeal is quoted at US$417.80 a tonne, on a free on board basis, Paranagua port for November shipment, versus US$545.75 in early September.
Corn is priced at US$184.96 a tonne for October arrival on the US Gulf, down from US$224 at the start of June.
U.S. corn production is estimated to climb to an all-time high of 367.68 million tonnes this year and soy output is forecast at a record high of 106.87 million tonnes.