Thai millers fear RI corn defaults

Thai millers fear RI corn defaults

BANGKOK (Reuters): Thai feed mills, fearing that Indonesian unrest and overselling of its corn might lead to defaults, are seeking new zero-tariff corn import quotas from the Thai government, trade sources said yesterday.

Many feared they would not be able to cover their needs from Indonesia by the end-June deadline set by the government and that could be exacerbated by a local crop delay, they told Reuters.

"The Thai feedmill association is discussing the amount sought before passing the proposal on to the commerce ministry. It will be well above 150,000 tons," said one trader.

The government in March allowed the feed industry and end users to import 300,000 tons of corn tariff-free on condition that deliveries be completed by June 30. It is estimated that uncovered demand stood at around 40,000-50,000 tons.

"Some feed producers waited until the last minute to buy, therefore their options are limited. They think they can buy cheap Indonesian corn but there is no corn left there. Actually, we heard the country oversold and might have difficulties meeting obligations," said another trader from a European house.

"The situation there also raised questions whether the shipments will be able to arrive here in time," he said.

Industry sources said the local crop might not be available by July as earlier anticipated as extreme heat had killed most of the first crop and farmers had to replant.

The local corn price edged up to 5.70 baht a kg from 5.35 a kg a week earlier on aggressive buying.

Soymeal buying continued on a hand-to-mouth basis due to lack of credit and a slowdown in local demand.

Thailand imported only 241,815 tons of soymeal during the first quarter of 1998 compared with 322,814 tons in the same period a year ago.

South American June soymeal was quoted around $183-185 per ton c&f Bangkok, traders said.

Flour mills also entered the market for routine wheat buying. Traders said one mill bought a cargo of optional-origin for June shipment.

"Demand for wheat has dropped substantially. Last year Thailand imported around 500,000-550,000 tons. This year it won't exceed 400,000 tons," said an executive at a major flour mill here.

"The crisis badly hit consumption of bread and confectionery items. It's the instant noodles industry that helps support wheat demand," he said.