August 30, 2012

Indonesia's soymeal, corn imports may drop on high feed costs

As meat producers struggle to cope with record prices of the feed ingredients and the government limits grain purchases, Indonesia's soymeal and corn imports may decline this year.

Meal imports will probably drop to about 2.2 million-2.3 million tonnes, from 2.4 million-2.5 million tonnes in 2011, Desianto Budi Utomo, secretary-general of the Indonesian Feed Mills Association, said in an interview. Corn imports may drop to 1.5 million tonnes from 3.1 million tonnes, he said.   

Soymeal, mixed with grains to make feeds for poultry and pigs, and corn surged to all-time highs in Chicago this month as the worst US drought in half a century cut supplies of oilseeds and grains. The surge raised global food costs and prompted speculation importers will be forced to cut purchases in so-called demand destruction, or seek cheaper alternatives. Indonesia is the world's largest soymeal importer.   

Indonesia's soymeal purchases from India, the fourth-largest shipper, will probably increase 20-25% this year from about 350,000 tonnes in 2011, as feed-millers seek cheaper alternatives to US supplies, Utomo said.   

Most-active soymeal, which peaked at US$531.90 per 2,000 pounds on the Chicago Board of Trade on August 27, traded at US$522.30 at 11:17 a.m. in Singapore, 67% higher this year. Soy reached US$17.605 a bushel on August 27, the most expensive ever. Corn rallied to a record US$8.49 a bushel on August 10.   

Indonesian millers are replacing some soymeal with cheaper substitutes, including meat-bone meal, Utomo said in Phuket. Millers are mixing more cassava and rice bran into feed to cut the use of corn after the government imposed limits on imports to encourage farmers to boost planting, he said.   

Indonesia may import 3.2 million tonnes of soymeal in the 2012-13 season compared with 3.07 million tonnes in 2011-12, according to a forecast from the USDA. That makes it the largest single-country buyer.