Cheap RI corn hurts Malaysia's grains trade

Cheap RI corn hurts Malaysia's grains trade

KUALA LUMPUR (Reuters): Trading of imported feed grains in Malaysia was lifeless yesterday as livestock farmers limited their buying to absolute essentials due to tight liquidity, industry sources said.

The market was further hurt by cheap Indonesian corn, which continued to arrive in unknown quantities on barges run by barter traders.

Corn is the most widely consumed imported feed grain in Malaysia.

"The arrival of maize from Indonesia is almost as difficult to estimate as the arrival of illegal immigrants on our shores," said the sales manager for grains at a local flour mill.

Trade sources said the stockpile of Chinese and Argentine corn at Malaysia's central Port Klang had grown to almost 100,000 tons this week, from an estimated 80,000 a week ago.

"It's a known fact that livestock farmers are buying feed from hand-to-mouth now because of the tight cash situation," said a trader. "But we're not entirely sure whether the higher stocks are because of this or because they're buying Indonesian corn."

Maize from Indonesia could be obtained in Malaysia between 300 and 400 ringgit ($79 and $106) a ton, grains traders in the capital said.

They said this was a huge discount compared with the 500 ringgit a ton C and F for Chinese maize out of Port Klang. Argentine corn out of the same port was priced at 510 ringgit a ton C and F.

Traders said it was not possible to reduce rates of corn from other origins to compete with Indonesian maize.

"We're fighting with barter traders who will give as much discount as possible to undercut the real market," said one trader. "If we put our prices at 300 ringgit, they'll sell at 250."

The traders said although Indonesian maize was inferior in quality to Chinese and Indonesian corn, pricing was what mattered to farmers now.

"Anyway, the pigs and chickens aren't complaining that the food is bad, so as long as there is adequate feed, the farmers are happy," said another trader.

Indonesian corn started arriving on Malaysian shores two weeks ago after Jakarta said it will export most of its maize this year due to tumbling meat consumption and livestock production.

Indonesia, which expects to produce about 8.3 million tons of corn this year, said markets for the exports included Malaysia and Thailand.

Sales of imported feed grains in Malaysia languished after a sharp fall in the value of the ringgit made the staple more expensive for chicken and other livestock breeders since July last year.

The ringgit is currently at about 3.78 to a dollar, down 33 percent from its 2.52 level last July.