With world feed grain prices dropping everyday, Asian buyers are increasingly facing a dilemma whether to strike deals now or wait for still lower prices. And this may be slowing business volumes in Asia in the near term as buyers from China to the Philippines keep a close watch on harvests, export offers and crop developments across the globe. Bulging corn supplies in South America and the United States have more than offset China's lack of exports because of its dwindling domestic grain stocks.

And aggressive Argentine soyameal offers have filled the vacuum created by the paucity of offers from India. And with bird flu fears still lingering over most Asian countries, buyers in this region are cautious about demand with the prospects of mass slaughter of birds in any country hit by the disease.

"The price outlook is bearish and Asian importers think there is still more downside for prices," said Vijay Iyengar, managing director of Agrocorp International Pte Ltd, a Singapore-based commodity-trading firm.

"They have a lot of breathing space." Exactly a year ago, Asian feed ingredient importers were scrambling to pick up every available cargo that could be used as an alternative to corn, which rose to 6-1/2-year highs on world markets in the absence of Chinese exports.

They were desperate to pick up tapioca, palm kernel and even dry distiller grain, a by-product of ethanol production from corn, at a time when the landed cost of US corn in Asian destinations was close to $200 a tonne.

"But now, Argentine corn is available at $125 a tonne and people are still not interested," said a Singapore-based trader. "Some buyers have covered their needs but many think prices could fall below $120. Even US supplies are improving."

Copyright Reuters, 2005