Grain trade with RI in virtual halt

Grain trade with RI in virtual halt

SINGAPORE (Reuters): The uncertainty in Indonesia has brought
grain flows there to a near halt, and traders said yesterday they
expected little or no movement until the political situation
stabilizes.

"Things are out of control in Indonesia. The market will not
be quiet, it will be dead," said one Singapore-based trader with
a U.S. commodity house.

"If there are very good profits, some people may still take a
risk and do business with Indonesia. But if the profit is small
and the risks are high, I wonder who will do it," said another
Singapore trader.

On Wednesday, Indonesia bought 50,000 tons of U.S. dark
northern spring wheat, 13.0 percent protein, for July shipment,
but some traders voiced worries over the arrival.

"The arrival should not be a problem if the shipment is for
food purposes, but if the riots get worse and port operations
stop, it'll be another story," the trader said.

"Whether Indonesian buyers can open letters of credit is
another problem," said the trader.

In Thailand, industry sources said on Monday exporters had
suspended rice and sugar exports to Indonesia unless the sale was
backed up by letters of credit from third countries.

Letters of credit from Indonesia, hit by its worst unrest in
decades, would not be accepted until the situation in the country
returned to normal.

The departure of ethnic Chinese from Indonesia during the
riots cast more shadows on the market.

"Most people in the trade in Indonesia are Chinese and if they
are not around, who should we do business with and who should we
contact?" said one trader.

Shipowners are nervous about bringing their ships to
Indonesia, traders said.

"Even if the ship can arrive in Indonesia, there are still
worries over land transportation or whether the warehouses will
be attacked by rioters," said one trader.

"The sentiment is very pessimistic now," the trader said.

Asia's grains market has been slow in the past few months over
a regional financial crisis and some traders have hoped
activities would pick up slightly after Jakarta settled its
reform disputes with the International Monetary Fund (IMF)
earlier this month.

In the rice market, Vietnam's month-long ban on fresh rice
export contracts coupled with political instability in Indonesia
made Vietnamese exporters reluctant to strike contracts with
Indonesia even once the ban was lifted, traders said.

"We won't see anything happening at least for this week," said
the trader with the U.S. house.