USDA sees recovery in Asian farm demand

USDA sees recovery in Asian farm demand

SINGAPORE (Reuters): The USDA's General Sales Manager Chris Goldthwait said farm imports by Southeast Asian countries and South Korea were expected to drop sharply short-term, but a fairly quick recovery was likely in demand for staple commodities such as wheat, corn and soybeans.

"There is going to be a fall of considerable proportions on at least a short-term basis as currencies fall and liquidity tightens," Goldthwait told Reuters in an interview.

"But particularly for staple commodities and those that help industries processing for export, we think that there will be a recovery in demand fairly quickly."

He said he was hopeful more people would be ready to enter into deals to import commodities now that currencies were beginning to stabilize.

But he was less optimistic about the impact of the region's economic turmoil on prospects for sales of consumer-ready products such as fresh fruit, vegetables and processed foods.

"For those we will see a more substantial and somewhat longer term decline," he said.

U.S. Agriculture Undersecretary Gus Schumacher joined Goldthwait and Foreign Agricultural Service Administrator Lon Hatamiya in Singapore this weekend for the second leg of their swing through Southeast Asia, South Korea and Japan.

Schumacher had just arrived from Berlin and declined comment before he'd had a chance to visit Indonesia, the team's next stop.

They aim to get a better feel for how the currency and economic turmoil is affecting the region's agricultural markets and to help banks and importers understand the USDA's export credit guarantee program.

The USDA has made US$2 billion of farm export credit guarantees available to the region to help countries keep importing U.S. farm goods.

Goldthwait said he thought the fall in U.S. farm sales to the region would be a little higher than earlier estimates of $500 million.

Asked if it could be as much as $1 billion, he said it could be that high but they would not have a precise estimate until they publish their next forecast in several weeks time.

Asia was forecast to buy $23.6 billion in U.S. farm goods this year, out of the $58.5 billion of sales expected in fiscal 1998. Japan was the long-time number one customer worldwide with purchases projected at nearly $11 billion.

South Korea and Southeast Asia were forecast to buy $6.2 billion of U.S. farm goods this year. "One could see that $6.2 billion slip a little," Goldthwait said.