The Philippines has been importing corn from Indonesia since late September 2022 with at least 50,000 mt heard to be traded. In the past two months, about 18,000 mt of corn from Gorontalo has been exported to the Philippines, according to market sources.
Recent offers for Indonesian corn were heard around $340s/mt CFR Philippines and it was more competitive than South American corn as it is not subject to the heftier import tariffs under the minimum access volume. Platts assessed CFR Northeast Asia corn at $339.50/mt Nov. 2, S&P Global Commodity Insights data showed.
Similarly, Vietnam has booked corn cargoes from Indonesia in parcels of 10,000 mt for November shipments, with trades being done in the range of $322-$323/mt CFR South Vietnam, according to sources. In comparison, corn from South America was offered at $338-$339/mt for December shipments while January shipments were offered at $344-$346/mt CFR Nov. 2.
Platts assessed FOB Santos corn for December loading at $305.40/mt Nov. 1, S&P Global data showed.
Feed buying groups in Malaysia were also heard to have picked up corn from Indonesia, albeit in smaller volumes of 5,000-8,000 mt, traded in recent weeks for nearby shipments, according to market sources.
Importers in Malaysia were also in discussion with the governor of Gorontalo on increasing volumes to Malaysia, according to an invitation letter seen by S&P Global Commodity Insights.
There is an anticipated surplus of Indonesia corn in 2022 of 2.3 million-2.5 million mt, according to the National Food Agency, or BPN, following a downward revision of the surplus from January to September 2022.
Weak demand in the Indonesian feed milling industry meant that the surplus could be not absorbed by corn buyers, sending domestic corn prices sliding in recent months. “Higher interest rates and required working capital are crippling both feed millers and poultry farmers here,” a trader said.
The United States Department of Agriculture estimates Indonesia’s corn production at 12.8 million mt for the 2021-22 marketing year (September-August) and at 13 million mt for the 2022-23 marketing year.
Market participants expect domestic corn consumption of around 10 million-11 million mt for feed milling and wet milling.
The surplus is expected to increase in the coming years as Indonesia laid out plans to increase corn production and yields using hybrid seeds, S&P Global previously reported.
The average market price for Indonesian corn at 15% moisture basis delivered to feed mills in West and East Java was heard around Rupiah 4,400/kg (28 cents/kg) in the week of Oct. 31, down 34% from the monthly high recorded in April 2022, according to market sources.
The last time domestic corn prices fell below the Rupiah 4,000/kg was between June to August 2020 when domestic demand was hampered by the COVID-19 pandemic, sources added.
With domestic demand unable to absorb the surplus, the Indonesian authorities have faced increasing pressure from corn farmers to find a solution to maintain price levels. Indonesia’s Bureau of Logistics, or Bulog, had been exploring the possibility of exports after building up adequate reserves in the domestic stockpile, sources said.
The market is unlikely to get a reprieve from the fall in domestic corn prices in Indonesia over the next few months without further intervention or increase in demand.
“Farmers are planting now for the rainy season and come February, it will be harvested and there will be plenty of corn,” an Indonesia-based analyst said.
However, market participants warned that huge corn exports from Indonesia should not be expected. “Drying capacity, especially in Sulawesi, is insufficient to dry the corn to the desired specifications for exports,” a local trader said. They added that majority of the country’s corn production is in Java, which will serve domestic feed millers.
“The export situation will be monitored closely and controlled by the authorities and can stop overnight if there is a domestic shortfall in the future,” a domestic feed miller said.
Buyers from Vietnam and the Philippines are likely to keep a close watch on the export situation amid high global corn prices following a crippled Mississippi River logistics system, lingering uncertainty on the humanitarian corridor for grains export out of Ukraine and fresh updates on the potential Brazilian corn exports to China in 2022.
