SE Asian crisis batters feed and flour mill firms<\/p>\n
SINGAPORE (Reuters): Southeast Asia's currency crisis has
\ndriven some feed and flour mill companies to the brink of
\ncollapse while others are shying away from any buying until they
\nhave to, traders said yesterday<\/p>\n
\"Everybody is bleeding. Many of the smaller Southeast Asian
\nfeed companies are on the brink of bankruptcy. The other big ones
\nare not buying until the very last minute,\" a dealer for a U.S.
\ncommodity trading house said.<\/p>\n
\"Currencies are the key. The economic outlook is much weaker
\nin Indonesia, Thailand and Malaysia,\" another dealer said. \"I
\nthink a lot of people are sitting on their hands and waiting
\nuntil the last possible moment before buying.\"<\/p>\n
The crisis was triggered by the de facto devaluation of the
\nThai baht in July. Some other regional currencies tumbled in its
\nwake immediately. Most of the rest have now succumbed to gloomy
\ninvestors fleeing regional markets.<\/p>\n
As a result, dealers said feed demand in the region may drop
\nby 10-20 percent as plunging currencies make it more expensive to
\nimport animal feed for the poultry and livestock sectors.<\/p>\n
Consumption of bread products is also likely to suffer and
\nthis will hit the profit margins of flour millers in Southeast
\nAsia who are almost wholly dependent on imported wheat.<\/p>\n
\"In this situation, people will probably go back to eating
\nrice,\" a dealer said. \"Chicken is just too expensive for them.\"<\/p>\n
The situation has become so bad that some trading houses
\nreported major feedmills in places like Indonesia and Malaysia
\nwere now asking to spread out payments for grain and oilseed
\npurchases.<\/p>\n
\"Even people we regularly sell to are asking for deferred
\npayment terms,\" a European trader said.<\/p>\n
'Scary'<\/p>\n
Another dealer said the situation is \"scary\".<\/p>\n
\"You're not sure if the companies you're dealing with are
\ngoing to be around tomorrow. So what you do is you just stick to
\nyour regular customers,\" he added.<\/p>\n
One industry analyst said Indonesian imports of wheat, usually
\naround two million tons a year, will take a hit. The country is
\nthe biggest importer of wheat in Southeast Asia.<\/p>\n
\"Wheat imports are going down,\" he said. \"The crisis is
\nstarting to have an impact.\"<\/p>\n
The situation for Indonesia's corn imports is less clear.<\/p>\n
It usually imports 800,000 to one million tons of corn a year.
\nWhile the currency crisis will make imports cost more, a drought
\ncaused by the El Nio weather anomaly will force Jakarta to buy
\nmore corn, probably from China.<\/p>\n
\"They have to import corn because of the drought,\" a dealer
\nsaid.<\/p>\n
The only whiff of business being done in the region is in
\nreports that Indonesia may be in the market for three cargoes of
\nIndian soymeal totaling around 30,000 tons, dealers said. The
\nsoymeal will be for November\/December delivery, they said.<\/p>\n
\"Some of the Indonesians may buy soon, but they're still
\nshopping around for good prices,\" one dealer said.<\/p>\n
\"People in the region are trying to put off the inevitable.
\nBut they really have to buy at some time,\" a trader said.<\/p>\n
In the meantime, the grains and oilseeds business in the
\nregion remained quiet, praying that the waves of speculative
\nattacks on Southeast Asian currencies will end soon.<\/p>\n
\"The currency crisis has really harmed buying here,\" a dealer
\nsaid.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/se-asian-crisis-batters-feed-and-flour-mill-firms-1447893297",
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