Regional grains market still waiting for RI L/Cs

Regional grains market still waiting for RI L/Cs

SINGAPORE (Reuters): Southeast Asia's grains market stayed in the doldrums yesterday and there were no signs of regional demand picking up in the near term, traders said.

They said they were waiting for buyers in Indonesia, one of the main players in Asia, to provide letters of credit (LCs) for fresh deals.

"We hope things will turn better under Indonesia's new government but we are not doing anything now," said one Singapore-based trader with a European commodity house.

"At this moment most of us are still concerned about LCs. Maybe a handful of state banks in Indonesia can provide LCs but I prefer to wait a little longer to do anything with Indonesia," the trader added.

Bloody riots erupted earlier this month in the capital Jakarta and killed more than 500 people.

The riots led to the downfall of veteran ruler President Soeharto, who handed over to his deputy and long-time protege B.J. Habibie last Thursday.

Before the riots, Indonesia bought 50,000 tons of U.S. dark northern spring wheat, 13 percent protein, for July shipment and traders said they had not heard new deals so far.

"I haven't heard Indonesia buying any more wheat. They may buy some rice after Vietnam eased rice export restrictions," said another trader.

Vietnam has partially lifted a ban on fresh rice export contracts, allowing some state-owned firms to negotiate new deals.

Early this year, the State Logistics Agency (Bulog) said Indonesia would need to import about 3.33 million metric tons of rice, assuming the agency could procure one million metric tons from local growers.

From January to May, Bulog only procured 80,000 tons of rice, newly-appointed State Minister of Food and Horticulture A.M. Saefuddin was quoted as saying on Wednesday.

In Malaysia, another big player in Southeast Asia, traders said a standstill in the market would likely last a few weeks.

"Malaysia is fully covered. They don't need to buy at least in the next few weeks," said one trader.

"The only possibility is for Chinese corn. China offers very low prices (with) which the United States and South America can not compete," the trader said.

Chinese sellers offered corn at $114-$116 per ton, some $15 lower than offers from the United States and South American, he said.

"It's easier to buy from China also because they can sell in smaller lots and it takes less time to ship the corn from China than from the West," the trader said.