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.