March 11, 2011

 

Indonesia secures biggest Indian corn deal in two years

 

 

Indonesian feed millers have snapped up the biggest corn import deal shipments from New Delhi, India in at least two years as Jakarta rushes to lock in food supplies in the midst of diminishing global grain supplies.

 

After surprising the market with its large rice purchases, Indonesia has turned to corn as countries from Asia to the Middle East step up grain imports to ensure ample supplies in the face of rising food costs.

 

Traders have sold some 100,000 tonnes of Indian corn to Indonesia in recent deals, which traders said were the biggest sales to the Southeast Asian nation from India in at least two years.

 

"These are the kinds of things that the governments are doing to stockpile grains," said Ker Chung Yang, investment analyst at Phillip Futures in Singapore, referring to Indonesia's purchases of rice and corn.

 

"They are trying to corner supplies before it gets too late and supplies get tight."

 

Benchmark US corn last week climbed to its highest since July 2008, lifted by estimates that corn stocks in the US, the world's top exporter, will drop to a 15-year low at the end of the marketing year.

 

USDA will release on Thursday its March supply/demand and world production reports and an average of analysts' estimates showed this season's ending supply at 665 million bushels.

 

Indonesia, which aims to be self-sufficient in rice, surprised markets in January by buying five times as much rice as expected, in a month when global food prices hit a record and food security moved to the top of policymakers' agenda.

 

The government has suspended import duties on rice, soy and wheat as part of its efforts to fight inflation.

 

Traders said they expected more sales to Indonesia of Indian corn which is one of the cheapest origins.

 

"Indonesia is hot at the moment, there is good demand for Indian corn," said one Singapore-based trader who sells feed grains to Asia. "Indonesia has taken 100,000 tonnes from India since they started buying in the last three to four weeks."

 

In one of the latest deals signed last week, Indonesian feed mills bought 10,000 tonnes of Indian corn at US$312 a tonne, including cost and freight. This compared with around US$340 to US$350 a tonne quoted for rival South American cargoes.

 

The deals which started a few weeks ago were signed between US$290 and US$315 a tonne, C&F, traders said.

 

Another Singapore-based trader said vessels to load some 70,000 tonnes of corn were lined up at Kakinada port in southern India for Indonesia.

 

"I haven't seen a lineup of ships like this and such volumes in a short period in at least two years," he said, adding one of his vessels was waiting to load 14,000 tonnes of the grain.

 

Indonesia has estimated corn production at 17.93 million tonnes this year, down 2% from last year, according to a forecast issued by its statistics bureau.

 

The country expects to import more than two million tonnes of corn this year, up from an estimated 1.5 million tonnes in 2010, the chairman of the Indonesian Feed Mill Association has said.