Crop woes to double Indonesia's corn imports

Indonesia will have to import twice the amount of corn it bought last year as an expected drop in domestic output had pushed up local prices by more than 30 percent in recent months, an industry official said on Wednesday.
Budiarto Soebijanto, chairman of the Indonesian Feedmilers Association, said corn imports are likely to be around 800,000 tonnes in 2006, compared with 400,000 tonnes last year. A bulk of that would come from Argentina.
"The local crop has suffered quite a bit because of erratic weather. Domestic prices are rising sharply. We will have to fill the shortage with additional imports," he told Reuters in a telephone interview.
Budiarto said Indonesia corn production would likely fall to around 7 million tonnes in 2006, from 8 million tonnes in 2005. Local corn prices have risen to 1,800 rupiah a kg from about 1,350 rupiah in January on fears of a domestic shortfall.
He said: "February and March are months in which we normally see supplies rising sharply. We did not see anything like that this year. It was a very long rainy season and now it's a very tight domestic market. We are hoping that output from the second crop will be better."
Indonesia is the second-biggest corn importer in Southeast Asia, after Malaysia. It used to import 80 percent of its import requirements from China until a couple of years ago. With China itself facing a shortfall, Indonesia is now increasingly eyeing Argentine supplies to fill the vacuum. "We have at least seven cargoes arriving this week and in the next few weeks," Budiarto said. "Five cargoes are arriving from Argentina and the rest is coming from the United States. That should take care of our requirements for June and July."
He said Indonesian buyers were sniffing around for more cargoes but were unlikely to strike any new deals until all the cargoes, which were contracted earlier, had arrived.
Most of the Argentine cargoes had been contracted at $135-$145 a tonne, including cost and freight, he said. "We will see how domestic prices react when these imported cargoes arrive. Then we will think of new deals but we will surely need to import more," Budiarto said.
On Tuesday, corn futures at the Chicago Board of Trade ended higher as hot weather moved into the US Midwest crop region. The July contract rose 1/2 cent to $2.54-1/2 per bushel. New-crop December was up 3/4 cent at $2.79-3/4 per bushel.