Mon, 14 Mar 2011

From: The Jakarta Globe

Singapore. Indonesian feed millers are snapping up corn cargoes from India, striking the biggest import deals with New Delhi in at least two years as Jakarta rushes to secure food supplies amid shrinking global grain stocks.

After surprising the market with its large rice purchases, Indonesia has turned to corn as countries from Asia to the Middle East step up grain imports to ensure ample supplies in the face of rising food costs.

Traders have sold some 100,000 tons of Indian corn to Indonesia in recent deals, which traders said were the biggest sales to the nation from India in at least two years.

“These are the kinds of things that the governments are doing to stockpile grains,” said Ker Chung Yang, an investment analyst at Phillip Futures in Singapore, referring to Indonesia’s purchases of rice and corn. “They are trying to corner supplies before it gets too late and supplies get tight.”

Benchmark US corn last week climbed to its highest since July 2008, lifted by estimates that corn stocks in the United States, the world’s top exporter, will drop to a 15-year low at the end of the marketing year.

The US Department of Agriculture will release its supply and demand and world production reports this month. An average of analysts’ estimates showed this season’s ending supply at 665 million bushels.

Indonesia, which aims to be self-sufficient in rice, surprised markets in January by buying five times as much rice as expected in a month when global food prices hit a record and food security moved to the top of policy makers’ agenda.

The government has suspended import duties on rice, soybeans and wheat as part of its efforts to fight inflation.

Traders said they expected more sales to Indonesia of Indian corn, which is one of the cheapest origins.

“Indonesia is hot at the moment. There is good demand for Indian corn,” said one Singapore-based trader who sells feed grains to Asia. “Indonesia has taken 100,000 tons from India since they started buying in the last three to four weeks.”

In one of the latest deals signed last week, Indonesian feed mills bought 10,000 tons of Indian corn at $312 per ton, including cost and freight. This compared with around $340 to $350 per ton quoted for rival South American cargoes. The deals, which started a few weeks ago, were signed between $290 and $315 per ton, traders said.

Another Singapore-based trader said vessels to load some 70,000 tons of corn were lined up at Kakinada Port in southern India for Indonesia. “I haven’t seen a lineup of ships like this and such volumes in a short period in at least two years,” he said.

Indonesia expects to import more than two million tons of corn this year, up from an estimated 1.5 million tons in 2010, the chairman of the Indonesian Feed Mill Association has said.