More grain flow seen as Indonesia comes to life

More grain flow seen as Indonesia comes to life

SINGAPORE (Reuters): Movements of rice and corn in Southeast Asia are on the rise as Indonesia comes to life in the grains market, traders said yesterday.

For soybeans and wheat, however, traders still saw a lukewarm market in the Far East despite continued falling world prices. Soymeals are at 11-year lows, wheat seven-year lows and soybeans three-year lows.

"Focus will still be on basic needs such as rice, sugar or corn. The buying will gradually move to wheat and soybeans, but not that soon," said one Singapore-based trader.

Indonesia's Food Minister A.M. Saefuddin said on Wednesday he would visit Thailand, the world's top rice exporter, to discuss the purchase of 100,000 tonnes of rice under a government-to- government deal under which Indonesia is seeking to defer payment for three years.

Jakarta is also negotiating purchase of 500,000 tonnes of rice from China and another 300,000 tonnes with the Islamic Development Bank.

Earlier this month, Vietnam approved a deal to sell 100,000 tonnes of rice to Indonesia on terms of one-year deferred payment, and to donate a further 10,000 tonnes.

"It looks like the Philippines may also need some rice. The market is becoming more active," a trader said.

Officials in the Philippines have said rice output would likely drop to 10 million tonnes this year from 11.2 million tonnes last year due to a lack of rain.

Traders also saw possibilities of increasing corn buying from the Philippines, where corn output is expected to drop 12 percent to 3.794 million tonnes this year from a year ago.

"Traditionally the Philippines seek U.S. supplies, but they are also quite interested in Chinese corn now," said one trader South American corn shipments continued to arrive in Southeast Asia while U.S. supplies went to such East Asian countries as Taiwan and South Korea, said one trader.

"Inquiries have increased over the past week from Malaysia and the Philippines. It is a good sign," said the trader with a European house.

"Chinese corn is cheaper than Argentine corn, but when Indonesia corn comes out, we'll see competitive prices," the trader said.

In the wheat market, the United States on Wednesday named 18 nations, including Indonesia, and regions eligible to receive donations of wheat under a new $250 million program aimed at alleviating hunger.

U.S. Agriculture Department officials have also said Indonesia was assured of getting 500,000 tons of aid and possibly an additional one million tons.

Indonesia is one of Australia's top five wheat consumers but has not been a major market for U.S. wheat in the past.

"It's not clear so far how much market share the United States will take over from Australia in Indonesia, but with U.S. financial help, Indonesia should buy more U.S. supplies than it did in the past," a trader said.

Under the United States' GSM export credit program, or a year's credit from suppliers, Indonesia is expected to obtain financing from U.S. banks.