Southeast Asian corn imports seen up on El Nino drought
Southeast Asian corn imports seen up on El Nino drought
SINGAPORE (Reuter): Southeast Asian animal feed buyers may have to import large additional quantities of corn for the fourth quarter as drought linked to the El Nino weather anomaly bites into domestic crops, traders said yesterday.
At the same time buyers are facing much higher prices for the staple as their currencies have sagged against the U.S. dollar, in which most internationally traded commodities are priced, and as benchmark U.S. corn futures tick upwards.
Indonesia in particular may have to import about 300,000 tons of corn, worth about $43 million at current prices, between October and December as El Nino has hit the domestic crop hard.
But the gyrations in the rupiah, following the currency's recent sharp fall against the dollar after speculative attacks, will stop importers immediately booking their orders as they wait for the foreign exchange situation to stabilize.
"It's a tough call, but I think 300,000 tons is a reasonable figure," a dealer for a foreign trading house said.
"They might delay buying though until the rupiah settles down. They have to sort out their exchange rate problem first," another senior trader told Reuters.
A dealer for a U.S. commodity house said various analysts and traders have calculated that Indonesian feedmills will buy anywhere from 200,000 to 500,000 tons of corn for the later part of the year to make up the shortfall in the local crop.
"Some guys put the number at half a million, but I don't think anybody in the trade believes that," he said. "Three hundred thousand (tons) is just about right."
The 300,000 tons would be on top of the estimated 400,000 to 450,000 tons arriving in September, mostly from China.
But Indonesian importers are stymied by the speculative attacks on the rupiah and other currencies in the region.
"Everybody's talking about the currencies. It's not that the Indonesians don't want to buy. They can't do anything now with the rupiah bouncing all over the place," a dealer said.
The rupiah's fall against the U.S. dollar in the past few weeks has driven up the cost of corn imports and boosted domestic corn prices by around 20 percent, the dealers said.
Malaysia is in the same fix as Indonesia, with a sliding ringgit complicating the situation for its feedmills.
"They should have open positions in the last three months for about 150,000 tons of corn. But they also have to contend with the weak ringgit," a trader said.
Thailand, on the other hand, has nearly completed its duty- free importation of 150,000 tons of corn and will not need supplies anytime soon.
Dealers agreed that the key corn crop on Java in Indonesia has been hammered badly by a spreading drought stemming from the El Nino weather phenomenon.