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TOKYO, The Reuters Asia/Pacific Business Report: There was unease, but not alarm among major East Asian grain importers on Tuesday as trans-Pacific freight rates and U.S. corn prices blipped higher after the partial blockage of the Missisippi River.
The United States Coast Guard said on Monday it was still restricting passage of the river, a major export artery for the grain growing areas of the U.S. Midwest.
It said only small vessels could ply the route following Saturday's bulk freighter collision with a waterfront shopping complex in New Orleans.
"The U.S. Gulf/Japan freight route is a very delicate pipeline. An efficient operation is required to keep Japanese feed plants running smoothly," an official at a Tokyo-based commodity trade house said. "The accident is bad news."
The Tokyo corn futures market surged on Monday as local speculators rushed to build long positions on the freighter accident and supply concerns, traders said.
The two nearby contracts -- March and May 1997 -- hit the daily 400 yen limit by Monday's close. The spot March position continued to rally on Tuesday gaining 200 yen to 15,300 yen a tonne by the close of the day's trading session.
South Korean and Taiwanese traders said the news had pushed Pacific freight rates higher and nudged up U.S. corn export prices, but that the the congestion would have to continue for an extended period to affect local grain markets seriously.
"At the moment, there seems to have been no impact on the domestic market. But we have seen firming freight rates and a widening basis," an official with South Korea's National Livestock Cooperatives Federation (NLCF) said.
South Korean traders said the basis for U.S. corn prices for prompt shipment had risen by 0.5 U.S. cents a bushel over Chicago futures to 37.5 cents now, from 37 cents on Friday.
Traders in Taiwan said at least three shipments bound for the island were stalled on the Mississippi and many more incoming vessels would be delayed.
Shipments for Taiwan Members Feed Industry Group, Hui Shung Group and Marubeni Taiwan -- totalling 144,000 tonnes of corn and 16,000 tonnes of soybeans -- were waiting on the river for departure or loading, a corn trader said.
All three shipments were scheduled to depart from the Port of New Orleans around mid to late December, he added.
Taiwanese corn and soybean product prices would rise slightly due to the shipment delays, traders said.
"Local soybean and corn products will rise modestly, because a few days delay should have a minor impact on the market," one trader said.
Taiwan would not have any significant shortages unless the delays extend for another ten days or more, he added.
Japanese traders said that if the congestion persisted they would have to consider transporting grain by train to the U.S. west coast for export, but they were confident that adequate stocks would stave off any threat of animal feed shortages.
The Japanese Food Agency and the Mixed Feed Supply Stabilization Organization currently hold domestic reserves of 650,000 tonnes of corn, 150,000 tonnes of sorghum and 400,000 tonnes of feed barley.
A trader with South Korea's Cheiljedang Corp said due to the supply concerns major local grain buyers might now reconsider their previous plans to buy corn in place of feed wheat.
"But if it this goes on for only four or five days, we think there will be no impact on the market," he said.
The U.S. Coast Guard said on Monday shipping traffic in the Port of New Orleans would remain restricted until at least the end of the week, although it eased the limits to allow ships of up to 25 feet (eight metres) to proceed downriver.
The stricken freighter, the Bright Field, was loaded in Terre Haute, Indiana, at a facility owned by U.S. trader Cargill and was carrying nearly 56,000 tonnes of corn to Japanese customers and due to arrive in mid-January, Cargill in Tokyo said.
Cargill, Japanese trade house Itochu Corp and one other undisclosed company all owned grain on the ship, spokesmen from the two named firms said.
[12-17-96 at 04:51 EST, Copyright 1996, Reuters America Inc.]
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