May 13, 2009

Indonesia, the world's sixth-biggest soy importer, may lower its soy purchases abroad by six percent from 2008 to 1.16 million tonnes due to higher domestic output, an industry official said on Tuesday (May 12).

 

Indonesia's soy demand may grow 2-3 percent this year but imports may not rise because of higher domestic harvests, said Ali Basry, director of the Indonesian representative office of the American Soybean Association - International Marketing.

 

Indonesia's statistics bureau said the country's soy output may rise to 850,226 tonnes this year from 776,491 tonnes estimated in 2008.

 

Basry said domestic soy demand may grow to 2.13 million tonnes this year from around 2.09 million last year.

 

He said soy arrivals during the first four months of 2009 declined 33.8 percent to 250,000 tonnes from the same period a year ago.

 

Recent hikes in soy prices may pressure imports as traders avoid building up stocks, although it was too early to forecast a price trend for the rest of the year, Basry said.

 

The benchmark front month soy contract on the Chicago Board of Trade has retreated from seven-month highs set late last week on concerns about waning demand from China. Buying from China had fuelled recent rally.

 

Southeast Asia biggest economy may also purchase 2.07 million tonnes of soymeal this year, steady from a year ago, as feedmillers held back output in the face of an economic slowdown, Basry said.

 

Based on feedmillers' output estimate, Basry said production is seen flat at 8 million tonnes, hence, no increase in soymeal imports.

 

Feedmillers normally use a 20 to 25 percent soymeal mix in the production of animal feed.

 

In the January-April period, soymeal arrivals were flat at 650,000 tonnes, against 648,615 tonnes imported in the same period of last year.

 

Indonesia does not produce soymeal and sources its imports from Argentina, while 90 to 95 percent of soybean imports come from the United States.

 

Indonesia depended almost entirely on local soy until the late 1990s when imported beans first flooded the market as a result of International Monetary Fund-driven reforms, after which the state procurement agency lost its monopoly.

 

Indonesia, the world's largest producer of palm oil, uses soy for producing popular foods such as tofu, tempe and beancurd.

 

The influx of cheaper soy imports, a lack of incentives for farmers and poor farming practices reduced local soy output to 608,230 tonnes in 2007, from a peak of 1.87 million tonnes in 1992.