Indonesia buys Indian corn

Indonesian feed millers are snapping up corn cargoes from India as Jakarta secures food supplies amid shrinking global grain stocks.

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 tons of Indian corn to Indonesia in recent deals, which traders said were the biggest sales to the 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, an 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 price since July 2008, lifted by estimates that corn stocks in the United States, the world’s top exporter, will drop to a 15-year low at the end of the marketing year.

The US Department of Agriculture will release its supply and demand and world production reports this month. 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 policy makers’ agenda.

The government has suspended import duties on rice, soybeans 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 tons from India since they started buying in the last three to four weeks.”