RI seen buying corn as El Nino fears emerge
RI seen buying corn as El Nino fears emerge
SINGAPORE (Reuter): Indonesia is said to be negotiating to buy
up to 180,000 tons of corn for last quarter delivery over fears
that a drought caused by the El Nino weather phenomenon may hit
the crop in Java, traders said yesterday.
"Some of the Indonesians are beginning to take positions and
are asking for quotes. They're looking to buy between 150,000 to
180,000 tons of corn because the local crop is hurting from a
drought caused by El Nino," a senior trader told Reuters.
Another dealer for a U.S. commodity house said Indonesian
buyers "are picking up several cargoes for last quarter delivery
and would want a price of about US$120 (a ton C&F)."
Traders said the lowest recent offers the Indonesians received
for U.S. corn for October/December shipment ranged between $123-
$124 a ton C&F.
But regional dealers quoted U.S. corn coming into Southeast
Asia for September/October shipment on a Panamax slightly higher
at around $126-$128 a ton C&F after corn futures prices on the
Chicago Board of Trade (CBOT) rose overnight.
Drought is beginning to pose a threat to the corn crop on Java
and some dealers were apprehensive on whether this is linked to
El Nino. Experts in Indonesia have said the dry weather is
seasonal and is not linked to El Nino.
El Nino can wreak havoc with weather patterns around the Asia-
Pacific rim when unusually warm ocean temperatures develop off
the western coast of South America.
The most severe El Nino in recent memory took place in 1983
and caused blistering drought in Indonesia, South Africa, the
Philippines and Australia while triggering floods in India and
severe winter storms in California.
Scientists have said the current El Nino, which is said to be
the strongest since 1983, is likely to peak in December.
"The El Nino effect on...Indonesia is worrying. Java has not
gotten much rain," a grains analyst said.
Even though corn prices are trending lower, drought in
Indonesia and dry conditions in China's grain-growing provinces
may eventually stop the slide in Chicago futures prices.
"If it's hot and dry during pollination in China in the last
week of July and early August, the corn crop can get zapped very
easily. There won't be a Chinese corn program to speak of if that
happens," one dealer said.
Buyers from Thailand and Malaysia are not expected to enter
the market anytime soon, dealers said.
"You can forget Malaysia. They have too much corn and too much
soymeal. They will not be in for the next two months," a trader
said.
Thai buyers, on the other hand, were waiting for a decision
from the Commerce Ministry on whether to allow the duty-free
importation of 100,000 tons of corn.
"The Thai business is going very slowly," a dealer said.
Most of the trade is keeping a close watch on what looks like a
bumper U.S. corn and soybean crop.
Traders said, however, that some people will be tempted to buy
soon given the potential problems crops may face from El Nino in
China, Indonesia and Australia.
"The crop in the U.S. looks good, but there are a few speed
bumps along the way," one dealer said.