August 30, 2012

 

Grains rally may not affect Southeast Asian demand

 

 

With strong growth in Indonesia and rising poultry exports from Thailand driving consumption, Southeast Asian demand is unlikely to be affected by a record-setting rally in grains.

 

Steady Southeast Asian demand at a time when global supplies have been depleted by a devastating drought in the US, the world's top grain exporter, should further fuel a rally in benchmark Chicago prices that have already hit record highs.

 

Southeast Asia, where chicken and pork are staple meats, is likely to largely maintain imports of soy and corn to fatten animals, said John Lindblom, Southeast Asia director for the American Soy Association International Marketing.

 

"Some countries may experience a slowdown but it doesn't mean there is not going to be a growth in consumption," he told Reuters on the side lines of a regional grains meeting in Phuket.

 

"On an average demand for grains from this region has been growing at a rate of 5-6% per annum, may be this year we will see the growth slowing down to 4%."

 

The USDA has estimated Southeast Asia's soy and products imports will rise to 5.8 million tonnes in 2012-13, from 5.7 million tonnes a year ago. And the demand will be driven by the region's hunger for poultry products.

 

Indonesia has seen per capita consumption of poultry products jump to seven kilogrammes in the last three years from four kilogrammes, while Malaysia, which ranks among the world's top chicken consumers, is expected to maintain its demand, Lindblom said.

 

"If you look at Indonesia, it has had back-to-back years of good economic growth," he said. "Malaysia is a wealthy country, they eat a lot of chicken with growing fast food chains."

 

Malaysia's per capita chicken consumption is 38 kilogrammes -- the highest in Asia, compared with 42 kilogrammes in the US.

 

Thailand's poultry exports are also booming with sales to the EU opening up earlier this year, Lindblom said.

 

"Thailand's poultry exports have been very strong as EU opened up for imports. I think they have had a good year and we expect them to maintain the momentum of grain imports," he said at the conference.

 

US exporters and Asian buyers are gathered in Phuket for the ninth Southeast Asia-US Agricultural Cooperators Conference, which is being organised by lobby groups the American Soy Association International Marketing, the US Grains Council and the US Wheat Associates.

 

Slowing economic growth could dampen demand in the Philippines and Vietnam, Lindblom said.

 

"The Philippines and Vietnam already slowing down and high prices are only going to aggravate the problem."

 

US corn futures have climbed 52% since the start of June, while soy has jumped nearly 36% as the worst drought in 56 years curbs US yields. Wheat has surged about 33% with a Black Sea drought and poor rains in Australia adding to supply woes.

 

Vietnam's economic growth is forecast to slow to an annual pace of 4.31% in the first half of this year, even though second-quarter growth accelerated to an estimated 4.5%.

 

Philippine economic growth probably lost momentum in the second quarter from January-March, a Reuters poll showed, dragged by weak farm output and a slump in electronics exports as global demand slackened.