El Nino hammers RI, doubts up over imports

El Nino hammers RI, doubts up over imports

SINGAPORE (Reuter): A searing drought stemming from the El Nino weather anomaly is hammering the key Indonesian corn crop on Java and corn farms in the southern Philippines are reeling from the dry spell, dealers said yesterday.

The drought, coupled with the currency crisis afflicting the two nations, have fostered doubts about the ability of their livestock and poultry firms to maintain the current level of animal feed imports into next year, analysts and traders said.

"Indonesia is bad. The corn crop (on Java) is gone," said a dealer for a commodity house in Singapore said. Jakarta would have to import at least 300,000 tonnes of corn in the last quarter to make up the shortfall, he added.

Indonesia normally harvests around 200,000-400,000 tons of corn from Java. Agriculture Minister Syarifuddin Baharsyah said on Wednesday he saw no early respite from the drought and parched farms would get some rain only in November.

In that El Nino, floods and drought in more than 15 countries killed almost 2,000 people and caused at least US$13 billion in damage.

"What is the impact of all these economic problems on this region?" asked one analyst. "Do they have the money to continue their imports."

"The bigger Indonesian companies will be able to continue their import programs. But I know some of the smaller to medium ones may suffer as they try to juggle their resources for imports," a U.S. trader said.

Another dealer said the Philippines was in the same fix and that only major food outfits like San Miguel, one of the biggest companies in the country, may have the money to ride out the problems.

Budiarto Soebijanto, chairman of the Federation of Feedmill Operators in Indonesia, said corn imports were likely to touch one million tonnes in 1997 from 800,000-900,000 tonnes last year.

The Philippines is expected to import up to a million tonnes of corn, mainly for animal feed.

Traders said surging consumption of chicken and other meat in both nations will have to be met somehow by feed imports.

"They won't stop consuming things like chicken rice. So are they going to switch to lower cost feed?" one analyst asked.

More immediately, the Southeast Asian grains and oilseeds market was flat with traders saying buyers were very cautious about doing any deals due to the currency gyrations here.

The only thing heard in the market was the report that Malaysia bought about 30,000 tonnes of Chinese corn for January shipment, a dealer said. "I heard they've done the deal."

The Malaysian buyer reportedly got a discount from the current price of Chinese corn, which was quoted by the trade at around US$136-$138 a tonne C&F.

Thailand has ample supplies of corn and will not go into the market after the government approved duty-free imports of 150,000 tonnes of corn, traders said.

Soybean and soymeal buyers around the region sat back even though Indonesia and Malaysia have not covered their needs for the last quarter of the year.

Traders estimate Indonesia will need to buy around 50,000 to 70,000 tons of meal while Malaysia would have to pick up about 30,000-40,000 tons.

"In the last quarter, Malaysia and Indonesia are completely open," a dealer said, adding though that they will not be in a hurry to pick up material since they expect prices to head south due to a bumper U.S. and Indian soybean crop.