August 10, 2015
A Weekly Snapshot of Southeast Asia Commodities News and Commentary
AUSTRALIA TURNS TO CHINA, OTHERS AFTER INDONESIA
CUTS LIVE CATTLE IMPORT QUOTA
By Cristina Pastor, SACD Staffer and Jack Scoville, The Price Futures Group
Indonesia’s decision to drastically cut live cattle imports from top supplier Australia shocked the
livestock industry in Canberra and forced exporters to forge a deal with China and other
countries to cut their reliance on Jakarta.
Indonesia accounts for over half of Australia’s US$1.3 billion live export market of about 1.2
million head of slaughter cattle.
But in the middle of 2015, Jakarta announced it would only take 50,000 head of cattle in the next
three months, a huge fall of 80 percent from the 250,000 imported in the same period in 2014.
The Australian Livestock Exporters’ Council said the decision was a “shock” given they had
made “significant investments to cater Indonesian demand for beef.”
The government of President Joko Widodo has been more insistent on food self-sufficiency.
The Australians had been seeking a 12-month permit for live cattle into Indonesia so they could
plan for the year, but Jakarta did not take action on the suggestion.
Canberra insisted it is coincidental, but it then forged a deal with Beijing which the Australian
Agriculture Minister Barnaby Joyce said would open up a “massive new market” for its live
cattle exporters.
Australia could deliver up to a million head per year to China over the next decade, doubling the
size of beef exports.
“China is the fastest growing market for Australian beef exports and is now the third largest beef
market,” a report by the U.S. agriculture attaché in Canberra said, adding it could be worth an
additional A$2 billion in exports.
The problem is that it “could take years to establish,” the attaché report pointed out.
“The new Chinese market is unlikely to immediately offset the dramatic reduction in Indonesian
exports. Australian exporters need to firstly establish commercial relationships with Chinese
customers as well as ensure animal welfare was maintained from paddock to slaughterhouse,”
the attaché report concluded.
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Page 2
China would also be likely import cattle ready for slaughter, compared to Indonesia which buys
younger and lighter animals to fatten up.
In the last two years, Australia has also opened up several new livestock slaughter cattle export
markets in a number of countries. The countries are Lebanon, Bahrain, Egypt, Iran, and
Southeast Asian nations Cambodia and Thailand.
“There is significant commercial interest in the Thai market,” the attaché said, adding that
industry estimates that live cattle exports to Thailand “could reach up to 30,000 head annually.”
Under a free trade deal with Bangkok, Australia enjoys zero tariffs on feeder and slaughter cattle
imports into Thailand.
Aside from Indonesia, the other major importers of Australian cattle are Malaysia and Vietnam.
The market in Vietnam is also promising as Hanoi prefers a heavier animal that can be
slaughtered almost immediately compared to Indonesia, which has a weight limit of 350
kilograms for feeder cattle.
“Vietnamese meat consumption per capital is already greater than Indonesia and is considered a
promising market for Australian exporters,” the attaché said.
Since Widodo became president, he has said that Indonesia should be self-sufficient in beef
production in a years’ time.
“This policy is still in place but there are doubts whether the Indonesian cattle herd can be
maintained given growing demand,” the attaché report said.
Agriculture Minister Joyce will likely make representations with Jakarta and lobby the
Indonesians to set an annual quota instead of the current quarterly system.
The cattle destined for Indonesia will also likely find another market given the fact that global
beef prices remain high, analysts said.
“The expansion in (Australia’s livestock cattle) export markets available will provide greater
certainty…and an expansion in the industry’s size is possible over time,” it added.
But the capacity limits of northern Australia’s “fragile region could also be an important factor in
the industry’s future,” the attaché pointed out, even if its development is a priority for the
Australian government.
Conditions in parts of Australia are still dry, and producers are doing all they can to lower feed
and forage costs.
The country has seen drought conditions that forced herd liquidation, and more drought is
possible with El Nino. The herd liquidation seems to have come to an end, but it is unclear if
producers are working now to start to expand herds again. Recovery of production will take a
long time.
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Southeast Asia Commodity Digest
August 10, 2015
Page 3
EL NINO IMPACT ON INDONESIA PALM AREAS COULD BE
VARIED, BUT BEARS WATCHING
An El Nino weather pattern that can be the strongest on record is poised to strike palm areas in
Indonesia, but the impact of a dry spell will be hard to gauge on palm oil output in the country,
the world’s biggest producer of the vegetable oil.
A meeting of the Indonesia Coordinating Ministry of Marine Affairs recently reported that sea
surface temperatures, wind patterns and ocean currents strongly indicate the El Nino “will be of
the same intensity” as the one in 1997, the strongest in record.
The Badan Meteorologi, Klimatologi dan Geofisika (BMKG) of Indonesia (Meteorology,
Climatology and Geophysics Agency) said El Nino will peak in October/November and run
through February 2016.
A U.S. agriculture attaché said though that production losses in Indonesian palm plantations in
1997/98 “are a worst case scenario, and that there are several mitigating factors that may offset
this.”
The first would be palm plants that are drought resistant which began to be planted and are just
reaching maturity at this time.
“An El Nino is likely to be strongest in eastern Indonesia, outside of palm production areas,” the
attaché said, adding that though a strong El Nino is likely, “long term weather forecasting
remains highly variable.”
El Nino is an abnormal warming of waters in the equatorial Pacific and strong ones often result
in drought striking countries like Indonesia, the Philippines and large swathes of Southeast Asia.
Data from the Indonesia Palm Oil Association showed the bulk of production of the edible oil is
from October to December.
While the harvest should proceed on schedule in the last quarter of the year, any impact will be
felt in the 2016/17 season.
“Typically, oil palms can withstand drought periods (less than 150 mm of rain per month) of up
to three months with little adverse effect,” the attaché report said.
“Beyond 3 months, (palm) oil yields start to drop, although drops are usually lagged by 9 months
following the onset of drought stress,” the attaché added.
BMKG has said the current moderate El Nino should persist into early August but that it will
transition into “strong El Nino conditions between August/September to December 2015.”
The U.S. agricultural attaché in Jakarta said in a separate report that if the forecasts are accurate,
El Nino would be “running through Indonesia’s largest food cycle.”
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Southeast Asia Commodity Digest
August 10, 2015
Page 4
“Therefore, there is a possibility that Indonesia may suffer great food crop production losses
because of the prolonged and severe drought, similar to the 1997 El Nino,” it said.
For a look at historic crop yields changes due to El Nino in Indonesia, the report came out with
the chart below:
For now, the production forecast for Indonesian crude palm oil production in 2014/15 remains at
33 million tonnes and had been projected to rise in 2015/16.
Forecasts by the U.S. Agriculture Department projects Indonesian palm oil output will increase
to 35 million tonnes in 2015/16 from 33 million tonnes in 2014/15.
But worries over El Nino have prompted the U.S. agriculture attaché to revise “the 2015/2016
production estimate to 33 million tonnes, on par with 2014/15 production.”
Any significant losses in Indonesia though would be cushioned by the presence of hefty stocks
and the fact that palm oil could be supplanted by record production of soybeans in the U.S. and
South America, the main competitors to palm in the vegetable oil market.
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Southeast Asia Commodity Digest
August 10, 2015
Page 5
PALM OIL OUTLOOK: RISING INVENTORIES, BUMPER
SUPPLIES TO KEEP PRICES WEAK AND MAY HEAD LOWER
By Jack Scoville, The Price Futures Group
Palm oil prices were weaker, but soybean oil held to near unchanged for the week.
Analysts estimates for the official Malaysia Palm Oil Board (MPOB) data released on Monday
were for stocks levels to increase on disappointing demand ideas and increased production.
The price action last week suggests that the fears of big supplies are justified. Futures are now in
range of the lows set last August and September and futures could go even lower unless demand
improves.
Demand has weakened due to less buying in Europe and now from other Moslem countries as
the restocking after the Moslem fasting month of Ramadan comes to a close.
There are renewed fears about Chinese demand after weaker than expected manufacturing
activity reports from that country last week.
India is now buying less due to its own oilseeds harvest. Big supplies are available in South
America.
Palm oil prices should continue to struggle with rallies.
The MPOB said in a report for the week ending August 4 that turmoil in China’s financial
markets were likely to impact the demand for palm oil by the country.
Weakness in prices was also being caused by price declines in competing markets and the overall
fall in commodity prices globally.
On a fundamental basis, palm oil production in Indonesia, the world’s biggest producer of the
edible oil, is seen hitting 35 million tonnes in 2015/16 from 33 million tonnes in 2014/15 as
increased maturation of plants and an increase in planted acreage further boosted output.
Indonesia’s palm oil plantings are seen rising to 10.8 million hectares in 2015/16, from 10.6
million in 2014/15. Harvested area is at 8.9 million hectares in 2015/16 versus 8.5 million in
2014/15.
China and India are the leading importers of Indonesia and Malaysian palm oil, as the two
Southeast Asian producers enjoy a significant freight advantage over rivals in South America.
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Southeast Asia Commodity Digest
August 10, 2015
Page 6
MONTHLY PRODUCTION OF OIL
SUMMARY
FOR
THE
MONTH
2014 & 2015 (TONNES) - MPOB
Months
JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
TOTAL
PALM PRODUCTS
OF
JUNE
2015
Crude Palm Oil
Palm Kernel
Crude Palm Kernel Oil
Palm Kernel Cake
2014
2015
2014
2015
2014
2015
2014
2015
1,508,980
1,160,687 387,348
291,989 182,902
145,686 203,051
161,956
1,275,812
1,121,628 322,104
279,309 164,034
115,040 180,782
128,551
1,497,142
1,495,151 386,648
379,309 170,828
176,111 188,887
193,936
1,555,777
1,693,424 389,028
432,422 177,074
182,114 195,163
201,278
1,656,957
1,810,709 399,244
449,426 186,543
218,638 207,431
241,631
1,569,684
1,763,928 357,295
413,562 174,726
197,602 192,966
219,113
9,064,352
9,045,527 2,241,667
2,246,017 1,056,107
1,035,191 1,168,280
1,146,465
PALM OIL EXPORTS TO CHINA, INDONESIA AND THE EU BY
MALAYSIA IN TONNES FOR JANUARY TO JUNE 2015–MPOB
January
China 216,253
India 160,170
EU
172,269
February
64,765
222,162
136,510
March
April
132,722 262,713
297,549 87,391
94,369 130,520
May
359,660
342,859
267,245
June 2015
2014
243,932 1,280,044 1,493,251
435,833 1,545,963 1,156,308
216,678 1,036,160 1,141,072
PALM OIL EXPORTS IN JANUARY TO APRIL 2015 FROM
INDONESIAN PALM OIL ASSOCIATION (GAPKI):
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Southeast Asia Commodity Digest
August 10, 2015
Page 7
THAI DROUGHT INCREASES GRIP ON RICE
EXPORTS TO DECLINE IN 2015 AND 2016
AREAS,
By Cristina Pastor, SACD Staffer
A blistering drought tightened its grip on Thailand, forcing the government to again cut the
discharge of water for its rice farmers which could hit rice exports in 2016.
The Thai Meteorological Department said total rainfall is still 24 percent below the norm in July
and that even assuming normal rains arrive between August and October, the level in reservoirs
will be even lower in the next dry season rice crop in 2016.
The government in Bangkok is now planning to limit in the lower northern region and central
plains of Thailand to 30 million cubic meters per day, which is “half” of the normal discharge
rate.
“This will negatively affect Thai rice exports in the second half of 2015 and into 2016,” a report
by the U.S. agriculture attaché in Bangkok said.
“Thai rice exports are likely to decline to 9 million tonnes in 2015 and the export forecast for
2016 has been lowered to 9.5 million tonnes,” it added.
The U.S. Agriculture Department had forecast rice exports by Thailand in 2015 at 10 million
tonnes, rising to 10.2 million tonnes.
Thailand is a major rice exporter and dominates the regional market in Southeast Asia, with its
only competitor in Vietnam.
Some analysts believe a strengthening El Nino weather pattern in the Pacific Ocean may have
disrupted the arrival of annual monsoon rains in Thailand.
Late last month, the Thai Ministry of Agriculture’s Disaster Center said around 1.5 million rai of
main crop rice will be adversely impacted by the drought, especially in the lower northern region
and central plains where water discharges have been cut back.
Thailand’s Royal Irrigation Department has been reducing the water discharge for agriculture
due to worries about possible water shortages in the rest of the year.
If the current drought is linked to El Nino, the situation could well turn for the worse.
If El Nino peaks in the second half of 2015 as expected, dry season rice and corn crops are
believed under threat in Southeast Asian countries such as Myanmar, Cambodia, and Laos.
Between 1980 and 2013, there have been 3 strong, 5 moderate and 2 weak El Ninos, according to
data from the U.S. National Oceanic Atmospheric Administration (NOAA).
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Southeast Asia Commodity Digest
August 10, 2015
Page 8
PHILIPPINE DOMESTIC RICE PRICES HOVER AT HIGHEST IN
3-1/2 MONTHS
By Cristina Pastor, SACD Staffer
Rice prices in the Philippines were not updated in the last week but remain at levels that are the
loftiest in 3-1/2 months which may be a sign that more imports could be needed given the threat
to overall supplies of an El Nino weather pattern in the central Pacific Ocean.
The Bureau of Agricultural Statistics (BAS) said the price of well milled retail rice, the most
popular variety for consumers, stood at 41.58 pesos/kg for the week ending July 21.
That is the highest level for that variety of grain since April 7 when the price was at 41.65 pesos.
Wholesale well milled retail rice was at 38.30 pesos/kg for the week ending July 21, also the
loftiest since April 7 when it hit 38.41 pesos.
The price of regular milled retail rice was at 37.31 pesos/kg and regular milled wholesale rice
was at 34.60 pesos/kg in the week ending July 21.
As for rice stocks, the BAS said that as of June 1, rice inventories stood at 3.02 million tonnes,
down 4.7 percent from May 1 when the amount was at 3.17 million tonnes. The next update is
due in the days ahead.
BAS said rice stocks in government warehouses were enough for 22 days of daily consumption,
from 18 days in the previous month.
At one point the past few months, government warehouse stocks fell to as low as 10 days of
daily consumption, perilously thin since government warehouses are the first line of defense
against shortages of the staple food of the country’s 107 million people.
In commercial warehouses, there is enough rice for 33 days of daily consumption, from 31 days
as of May 1, more than double the level of 14 days on April 1.
Philippine average daily rice consumption is calculated by most analysts around 25,000 to
26,000 tonnes. The government believes the figure is closer to 23,000 tonnes.
The Philippines has been importing rice just as the government is preparing for the threat of
drought posed by an El Nino weather pattern this year.
A total of 500,000 tonnes was imported early in the year. A tender for 250,000 tonnes of rice was
partially filled with 150,000 tonnes and the official National Food Authority is authorized to
import another 350,000 tonnes.
The Philippines is allowing private traders to import over 800,000 tonnes of rice. Private sources
believe unofficial imports, a euphemism for smuggling, would bring in another 500,000 tonnes
due to high internal prices.
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Southeast Asia Commodity Digest
August 10, 2015
Page 9
The U.S. agricultural attaché in Manila believes imports will be around 1.8 million tonnes in
2015/16 (July/June).
The SACD has forecast total rice imports by the Philippines to 2.5 to 2.7 million tonnes from 1.8
million tonnes imported in 2014.
The reason for the increase is the possibility of typhoons or drought in the Philippines.
Typhoon/storm damage in the second half of the year could damage and force rice imports of an
additional 100,000 to 500,000 tonnes.
Philippine rice production forecasts have been trimmed by the government.
BAS said first half unmilled calendar 2015 rice production will only reach 8.27 million tonnes,
below the 8.38 million tonnes in the same period in 2014.
Harvest area is seen slipping to 2.07 million hectares, from 2.1 million which is likely a
consequence of farmers giving up on land that is not irrigated and cannot sustain their rice crop
due to a dry spell which has struck the country.
The Philippines’ main rice crop is harvested in the last quarter of the year, but storms have struck
the past three years during that period. Typhoon Bopha hit in 2012, the record breaking typhoon
Haiyan came into Leyte in 2013 and a total of five typhoons and storms struck from early
December 2014 to the middle of January 2015.
ASIAN RICE OUTLOOK: PRICES SLIP AS PHILIPPINES GETS
RAINS IN JULY, INDONESIA DEMAND IDEAS FALL
By Jack Scoville, The Price Futures Group and Cristina Pastor, SACD Staffer
Rice prices were generally weaker in Southeast Asia last week. Thai prices have moderated as
the government has kept the market supplied. Demand ideas for the Philippines and Indonesia
have dropped as the former especially got great rains in July and water supplies are back to
normal.
Rains have continued so far this month, and the country dodged a major typhoon that went
instead into Taiwan and then China over the weekend.
Production conditions in general for Southeast Asia remain good except for the drought in
Thailand.
Southern Chinese production areas are in line to get a lot of rain from the typhoon as it moves
inland and the rains will not be welcome. The rains come at a bad time in terms of crop
development and some losses are possible.
The region has already seen more rain than normal and crops there normally lose yields in wetter
than normal years as is often the case when an El Nino occurs.
The harvest is underway in the U.S. and yields so far have been disappointing in the Gulf Coast
area. Milling quality reports are very good.
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Southeast Asia Commodity Digest
August 10, 2015
Page 10
The harvest will start to expand in the next couple of weeks, but harvest in Arkansas will not
start until next month. Crops in Arkansas appear to be in generally good condition, and
producers expect generally good production in the state.
USDA will release new world and U.S. data, and U.S. production could be less again. World
stocks levels have been creeping lower in the monthly updates and this trend should continue.
As for cash rice prices, the Thai Rice Exporters Association said the price of Thai white rice 100
percent Grade B was at US$386 per tonne FOB on August 5, from $397 per tonne FOB on July
29.
The price of 5 percent broken Thai white rice was at $377 per tonne FOB on August 5, from
$388 per tonne on July 29.
Thai white rice 25 percent broken was at $365 per tonne FOB on August 5, from $372 per tonne
on July 29.
Quotes for Thai rivals Vietnam and India mostly were running at a discount to Thai grain.
Vietnam is the leading rival to Thai rice in the regional export market.
Vietnamese 5 percent broken rice was quoted at $350 per tonne on August 5, a discount of $22
to the same rice coming from Thailand.
India 5 percent rice was quoted at $390 per tonne and a $13 premium to Thai rice.
Vietnam 25 percent broken rice was quoted at $330 per tonne FOB on August 5 and a $35
discount to Thai rice.
Indian rice of the same variety was quoted at $355 per tonne and a discount of $10 to the Thai
grain.
PHILIPPINES BOOKS ORDER OF WHEAT AND MEAL,
INDONESIA AWAITS SOYBEAN SHIPMENT
By Cristina Pastor, SACD Staffer
The Philippines was the only buyer of U.S. grains from Southeast Asia, with Indonesia content to
wait for a shipment of soybeans in a subdued grains and oilseeds market.
The Philippines bought 61,000 tonnes of U.S. wheat in the week ending July 30, and its
accumulated imports of the grain stands at 285,000 tonnes, from 279,700 tonnes by this time a
year ago.
The Philippines’ accumulated imports of wheat from the U.S. as of May 28 reached 2.318
million tonnes, up 15.18 percent from 2.013 million tonnes imported by this time last year.
Wheat imports by the Philippines are expected to increase significantly in the coming years as
steady economic growth and an expanding, increasingly affluent middle class consume more
wheat products.
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Southeast Asia Commodity Digest
August 10, 2015
Page 11
The Philippines does not grow wheat and must import all supplies of the grain.
The country was forecast to import over 4 million tonnes in the 2014/15 marketing year and
those imports are seen rising to 4.4 million tonnes in 2015/16.
The country is the 4th largest U.S. wheat market globally in 2014, with sales value up 11 percent
to US$698 million. Wheat is the top U.S. agricultural export to the Philippines in 2014.
Manila also bought 4,500 tonnes of soybean cake and meal.
The Philippines’ accumulated imports of meal from the U.S. stood at 1.245 million tonnes as of
July 30, up 2.95 percent from the 1.209 million tonnes imported by this time a year ago.
Indonesia, for its part, is awaiting a shipment of 12,300 tonnes of U.S. soybeans. Indonesia is
forecast to import about 2.1 to 2.2 million tonnes of soybeans in 2014/15 (September/August), of
which 1.8 million tonnes is expected to come from the United States.
As of July 30, Indonesia’s accumulated imports of U.S. soybeans in the 2014/15 season stood at
1.706 million tonnes, down 24.52 percent from the 2.26 million tonnes imported by this time a
year ago.
Indonesia is the biggest importer of grains and soybeans in Southeast Asia. It uses the soybeans
primarily for popular foods like tempeh and tofu.
Cash wheat values for nearby delivery for buyers of U.S. wheat in Southeast Asia were flat for
soft white wheat, but higher for winter wheat, northern spring/dark northern spring wheat and
hard red winter wheat on August 7, industry sources said.
U.S. soft white wheat was quoted for nearby delivery out of the U.S. Pacific Northwest was seen
at US$220 to $285 per tonne FOB (free on board) on August 7, unchanged from the $220 to
$285 per tonne seen on July 31, trading sources said.
Hard red winter wheat quotes for nearby shipment were seen at $214 to $233 per tonne FOB on
August 7, from $210 to $230 per tonne on July 31, the sources said.
Northern spring/dark northern spring wheat was quoted at $228 to $237 per tonne FOB on
August 7, from $224 to $233 per tonne on July 31, they said.
Winter wheat was quoted at $250 to $257 per tonne FOB on August 7, from $239 to $250 per
tonne seen on July 31, they added.
Shipping rates for Handymax vessels from the U.S. Pacific Northwest (PNW) going to Southeast
Asia were flat from the previous week at $35 per tonne FOB as of August 7, shipping sources
said.
Rates for Panamax vessels from the U.S. PNW were seen at $34 per tonne FOB on August 7,
also steady from a week ago, shipping sources said.
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Southeast Asia Commodity Digest
August 10, 2015
Page 12
INDONESIA SOYBEAN IMPORTS RUNNING STRONG, SEEN
ON TRACK TO HIT 2.1 MILLION TONNES IN 2014/15
Indonesia, the biggest importer of grains and oilseeds in Souotheast Asia, will continue to be a
major importer of soybeans and is on track to import 2.1 million tonnes of soybeans in the
2014/15 season, with the U.S. the main supplier of the bean.
“Indonesian soybean consumption is driven by human food use,” the U.S. agriculture attache in
Jakarta said, adding demand for soy-based foods such as tempeh and tofu is fairly inelastic.
The Southeast Asian country, the most populous in the region, “is on pace” to hit the import
forecast.
Of the total, about 1.8 million tonnes will be supplied by the United States.
As of July 30, Indonesia’s accumulated imports of U.S. soybeans in the 2014/15 season stood at
1.694 million tonnes, down 24.88 percent from the 2.255 million tonnes imported by this time a
year ago.
The 2014/15 season ends on August 31.
While soybeans are running at a good pace, wheat imports by Indonesia are seen slipping
because of an economic slowdown in the country which has reduced consumer purchasing power
in the country.
The declining strength of Indonesia’s rupiah currency is offset by the low prices of soybeans and
strong consumer demand, which should ensure “that imports remain on track,” the attache
concluded.
Data from the Indonesian Statistics Agency said 2015 first quarter economic growth slowed to
4.71 percent from 5.14 percent in the same period last year. Farm and construction labor wages
slipped. The country’s rupiah currency fell against the U.S. dollar.
The U.S. agricultural attache said the slowdown, lower wages and weaker currency “are
inhibiting (wheat) imports.”
The attache lowered its forecast of wheat imports in 2014/15 to 7.6 million tonnes, from an
earlier forecast of 7.7 million tonnes.
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 13
VIETNAM ENDS COTTON SEASON STRONGLY AS IMPORTS
OF U.S. UPLAND COTTON UP OVER 60 PERCENT
By Cristina Pastor, SACD Staffer and Jack Scoville, The Price Futures Group
Vietnam ended the 2014/15 season on a robust note, as its imports of U.S. upland cotton are up
over 60 percent with Indonesian imports of the fiber also up strongly.
Vietnam did not buy any U.S. upland cotton in the week ending July 30, but is awaiting a
shipment of 49,000 running bales (RBs, 500-lbs each). The season ends on July 31.
Accumulated imports by Vietnam of U.S. upland cotton as of July 30 stood at 1.666 million RBs,
62.35 percent higher than the 1.026 million RBs it had imported by this time last year.
Vietnam has vastly exceeded the amount of upland cotton it imported from the U.S. in 2013/14.
At the end of the 2013/14 season on July 31, 2014, Vietnam’s total accumulated imports of U.S.
upland cotton, the most widely grown and commonly used variety, stood at 1.026 million RBs,
up 28.72 percent from the 797,500 RBs imported by the end of the preceding season.
Vietnam has become a major buyer of cotton due to its thriving textile and apparel industry.
The country’s total cotton imports in 2013/14 were estimated to have hit a total of 3.17 million
(480-lb) bales, with the United States accounting for about a third of the total.
Indonesia purchased 2,500 RBs of upland cotton in the week ending July 30. Indonesia is the
second biggest buyer of U.S. cotton in Southeast Asia.
As of July 30, accumulated imports by Indonesia of U.S. upland cotton was at 905000 RBs, up
45.07 percent from the 623,800 RBs imported by this time a year ago.
Indonesia has also surpassed the amount of U.S. upland cotton it imported in 2013/14.
The country’s accumulated imports of U.S. upland cotton reached 623,800 RBs by the end of the
2013/14 season on July 31 last year, up 43.46 percent from 434,800 RBs in 2012/13.
Cotton exports by Indonesia are seen increasing 10 percent to 3.28 million (480-lb) bales in
2014/15 and this will rise by almost 7 percent in 2015/16 to 3.5 million bales as an improving
global economy is seen boosting the demand for the country’s textiles.
Brazil has overtaken the United States as the largest cotton supplier to Indonesia with a total
market share of 45 percent.
The South American country was followed by the United States and Australia with a market
share of 22 and 13 percent respectively.
On the part of Thailand, the third leading buyer of U.S. cotton in Southeast Asia, it did not buy
any cotton from the U.S. and its imports are practically flat in 2014/15.
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 14
Its accumulated imports of U.S. upland cotton as of July 30 was at 462,100 RBs, down 0.21
percent from the 463,100 RBs imported by this time last year.
A few weeks ago, it seemed all but certain that cotton imports by Thailand from the U.S. would
fall short of last year’s pace.
Thailand’s accumulated imports of U.S. upland cotton in 2013/14 stood at 463,100 RBs by July
31, 2014, up 16.73 percent from the 396,700 RBs it had ordered the previous season.
Cotton prices moved lower in the U.S. and world markets last week.
The weekly USDA export sales report was bad for prices. China remains essentially out of the
market and Southeast Asia has not bought in a couple of weeks, so U.S. demand has been thin.
Prices have broken from recent highs and could now return to test the lows near or under 60.00
U.S. cents per lb, basis the December cotton contract in New York.
Competition for sales in the world market has increased as both India and Pakistan have good
production prospects this year, and India has a lot to sell from previous years as well.
The country had hoped to participate in Chinese demand, but now joins the U.S. in looking for
other buyers.
USDA will issue its latest production reports on Wednesday morning, and production should be
around 14.4 million (480-lb) bales for the U.S.
Ending stocks should hold about unchanged as USDA can drop exports on the slightly smaller
domestic production. World ending stocks last month were estimated by USDA at 108.14
million bales, and this estimate could remain about unchanged.
Over half of the world supply remains in China as they are likely to have over 65 million bales in
government storage.
VIETNAM MAY SEE LOWER COFFEE PRODUCTION; COCOA
TURNS INTO BEARISH DEMAND STORY
By Jack Scoville, The Price Futures Group
Coffee prices closed higher for the week in New York and London. New York once again is
fighting for stability near the $1.20 per pound level, basis September futures, and this time the
market might be able to hold.
Conditions are variable in Southeast Asia robusta areas, and there is talk of reduced production
in Vietnam.
Producers there remain tight holders of the previous crop and offered differentials remain near 60
over London, way too high to interest most roasters.
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 15
Some of the Southeast Asian demand has switched back to lower arabica grades in Central and
South America as well as the Brazilian robusta.
Prices are cheap, and the market heard lower production estimates from Brazil last week. The
producers group there said that output would not be more than 40 million bags.
Some private estimates from Terra Consultoria were closer to 45 or 46 million bags and more
generally accepted by the trade.
Wolters also estimated production near 45 million bags last week. These estimates are far below
the assumed production near 50 million bags and provided a reason to buy.
Sources in Brazil suggest that current hot and dry weather in Minas Gerais is affecting flowering
for the next crop, and robusta production in the northeast has also been hurt.
It was another week of lower cocoa prices for the market. The tone of the market has changed
from a bull supply side story to a more bearish demand side story.
The weak production from West Africa is now old news as production conditions for the coming
crop seem much improved.
The weather has been good with frequent rains to help offset some warm to hot temperatures in
the region.
Nigerian producers have complained of too much rain, but Ivory Coast is expecting production
of 1.7 million tonnes, an improvement from this year.
Southeast Asian areas have been drier than normal, but so far production ideas are holding as
trees are still reported in mostly good condition.
Stress could become a factor in both Malaysia and Indonesia if it remains drier than normal.
The real story in the last few weeks has been lower demand as the grind was reduced in the EU,
North America, and Asia in the quarterly data.
The high prices along with continuing economic worries around the world, but especially in the
EU and China, keep demand ideas weaker.
Futures went lower than the swing targets for the move and could rally in the short term, but
rallies will most likely find renewed selling interest from speculators and producers.
In sugar, New York futures are still working lower as the Brazilian Real currency and crude oil
keep working lower.
Demand worries are still around for this market, and the incentive for the Brazil producer is to
sell as the Real works lower. However, producers may hold back if they feel that the Real will
work even lower over time.
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 16
London white sugar futures are holding better than New York, indicating that consumer demand
is probably good.
The spread between white sugar and raw sugar has widened, and refiners are now able to buy
raw sugar and change it to white at a nice profit.
This has also been reflected in the carry spreads in new York that have narrowed over the last
few weeks. The spreads have stalled at an important resistance area on the charts, but should be
watched.
Further improvement in the October-March new York spread and a move above 110 on the
spread differential could be very important and imply that the tenor of the market is changing for
perhaps the longer term.
There are still widespread expectations for deficit production of 2.5 million tonnes of more
against demand for the coming year, and that would represent a change in direction in ending
stocks even if supplies remain generally large, and also imply that prices need not go lower.
DAILY COCOA BEAN PRICES IN MALAYSIA RINGGIT/TONNE
ON AUGUST 7, 2015 FROM MALAYSIA COCOA BOARD:
Tawau (Sabah)
8/07/2015
7,950
7/31/2015
8,400
Raub (Pahang)
8,350
8,550
Jerantut (Pahang) Kuching (Sarawak)
7,300
7,950
7,200
8,400
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 17
WEEKLY COFFEE PRICES FROM DAK LAK INVESTMENT
EXPORT IMPORT CORP. IN VIETNAMESE DONG/KG:
August 6, 2015
Giá Inexim (VNĐ/kg) (HKB)
Tại Daklak:
Net
RNL
36.700
R2 5%
- 200
(so với
R1 2%
+ 1.100
R2 5%)
Tại Kho
Bình Dương:
+400
July 28, 2015
Giá Inexim (VNĐ/kg) (HKB)
Tại Daklak:
Net
RNL
36.000
R2 5%
- 200
(so với
R1 2%
+ 1.100
R2 5%)
Tại Kho
Bình Dương:
+400
NEW ZEALAND STARTS TO RAMP UP PRODUCTION AS
DAIRY PRICES IN FONTERRA AUCTION STUMBLE
By Jack Scoville, The Price Futures Group
Dairy production conditions remain generally difficult in New Zealand and milk production is a
little lower there.
However, producers and processors are trying to ramp up production now amid signs of
increased export demand.
Some buyers are now restocking and are looking to buy in New Zealand. The country is a major
supplier of dairy products in Southeast Asia along with Australia. (See tables below)
Australian production is up slightly from last year. Production for the marketing year ending in
June was 2.6 percent higher than the previous marketing year.
Production increases were especially strong in South Australia and Tasmania. Only Queensland
reported less year-on-year production.
Prices in Oceana are expected to remain weak through the first half of the marketing year.
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 18
The latest Global Dairy Auction held last week featured mostly lower prices again, but the rate
of loss seems to be slowing and a bottom in prices might be found in the next few auctions.
In its latest auction on August 4, Fonterra daily cooperative in New Zealand said the average
price for all contracts fell by another 9.3 percent to US$1,815 per tonne, with world dairy prices
hovering at its lowest level in over a decade.
One of the biggest declines was in the average weighted price of whole milk powder (WMP)
which dropped by double digits again, falling 10.3 percent to $1,590 per tonne.
Skim milk powder (SMP) prices dropped 14.4 percent to an average weighted price at $1,419
per tonne.
The next auction is set for August 18. The Fonterra auction is a global benchmark which sets the
tone for world dairy prices.
Dairy prices were higher last week in the U.S. as production of milk starts to seasonally slow
and as demand from schools and institutions ramps up.
U.S. production has been very strong and milk is being sold at discounts to get it used. Supplies
of cheese and butter are strong.
Exports have not been strong, so U.S. prices have had to work lower to cut down on imports as
well as encourage more export potential.
NEW ZEALAND SKIM MILK POWDER EXPORTS BY
COUNTRY: QUANTITY IN METRIC TONNES AND AVERAGE
PRICE IN U.S. DOLLARS FOB PER TONNE (GLOBAL TRADE
ATLAS)
Malaysia
Philippines
Indonesia
Singapore
Thailand
2012
Q
PRICE
34,593
$3,472
30,738
$3,229
37,413
$3,180
21,269
$3,169
22,545
$2,995
2013
Q PRICE
36,106 $4,195
34,958 $4,179
33,780 $4,083
23,575 $3,920
15,816 $4,086
2014
Q
33,376
30,591
26,918
29,049
20,580
PRICE
$4,280
$4,273
$4,321
$3,873
$4,044
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 19
AUSTRALIA SKIM MILK POWDER EXPORTS BY COUNTRY
IN SOUTHEAST ASIA IN METRIC TONNES – GLOBAL TRADE
ATLAS
Country
2011
2012
2013
2014
Indonesia
Malaysia
Singapore
Philippines
Thailand
24,182
7,792
17,192
7,914
9,611
22,687
15,860
20,267
14,287
13,836
20,929
9,716
13,370
6,793
8,839
33,464
14,975
14,338
9,721
8,313
AVERAGE WEEKLY NATURAL RUBBER PRICES COMPILED
BY THE ASSOCIATION OF NATURAL RUBBER PRODUCING
COUNTRIES (ANRPC):
Average weekly natural rubber prices compiled by the ANRPC were not updated in TSR20
rubber and RSS3 rubber from Thailand in the past week.
The price of SMR20 rubber from Malaysia was at $145.64/100 kg or $1.4564/kg in the week
ending July 25, from $143.75/100 kg or $1.4375/kg in the week ending July 18.
Two weeks ago, the price of Thai STR20 rubber hit an average of US$148.67/100 kg or
$1.4867/kg in the week ending July 11, versus $153.53/100 kg or $1.5353/kg in the week
ending July 4.
Thai RSS3 rubber was at an average of $167.45/100 kg or $1.6745/kg in the week of July 11,
from $173.20/100 kg or $1.732/kg in the week of July 4.
The top three natural rubber producers are Southeast Asian countries Thailand, Indonesia and
Malaysia.
Rubber is used in most industries, primarily as tires in the automobile industry. The material is
also used in a variety of industrial and personal products, such as condoms.
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 20
WORLD GRAINS OUTLOOK:
WHEAT, CORN AND SOY COMPLEX MARKETS LOOK
FORWARD TO USDA SUPPLY/DEMAND REPORTS
By Jack Scoville, The Price Futures Group
U.S. wheat prices finished the week with slight gains after stronger performances near the end of
the week.
The stronger-than-expected USDA export sales report provided part of the support, but some
also came from traders getting ready for the next round of USDA production reports that will be
released Wednesday morning Chicago time.
A Dow Jones survey of analysts found that most expect unchanged winter wheat production
near 1.454 billion bushels and increased spring wheat and durum production at 628 million
bushels and 80 million bushels respectively. Spring wheat production ideas have increased on
good weather in the northern U.S. Great Plains.
We agree with the overall production estimates, although some hot and dry weather could have
damaged white wheat production in the Pacific Northwest.
Total winter wheat production could be closer to 1.445 billion bushels.
USDA is projected to slow a slight drop in wheat stocks for 2015-16 at 218.6 million tonnes.
Harvest is active in Europe and Russia, and generally good yields are reported there.
China is reported to have excellent wheat crops this year. Australian weather has been dry in
some areas and some wheat could be affected.
Egypt and Tunisia bought wheat in world markets. Egypt lowered its moisture maximum for the
wheat to 13.0 percent from 13.5 percent, so Russia got the business this time instead of France.
Price action overall is weak and chart trends remain mostly down, but futures are near oversold
levels and could stage a rally soon.
Corn prices moved a little higher and charts show that the market is just above some important
support areas between US$3.50 per bushel and $3.65 per bushel basis weekly futures.
Traders are marking time until the USDA reports on Wednesday morning. USDA is expected to
show a drop in U.S. production to 13.318 billion bushels, from 13.530 billion last month.
Analysts expect yields to drop because of the extreme rains seen in southern and eastern areas of
the U.S. Midwest.
However, history shows that corn often outperforms in wetter and cooler than normal years. It
is true that the weather was extreme in some areas through June, but July was very good for
production.
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 21
Corn in northern and western parts of the Midwest is said to be in very good condition, and yield
gains there could offset yield losses to the south and east.
USDA could issue a production estimate close to the estimate from last month or above last
month and create a bearish surprise for the market.
Production could be at least 13.600 billion bushels. World data is expected to show a small
decrease in ending stocks.
Europe has had hot and dry growing conditions for feed grains, including corn, and losses are
reported. On the other hand, Brazil should have a very big crop as the Safrinha harvest starts in
the short term.
Soybeans and soybean meal markets put in strong performances in the U.S. last week on supply
fears.
Some weather forecasts call for drier than normal conditions to continue in the Midwest into the
last part of the month, and there are some ideas that yields could be lost.
USDA is expected to show reduced U.S. production in its estimates on Wednesday morning
because of the extreme weather seen in May and June.
The extreme weather did produce significant prevented planting acreage in parts of the Midwest.
USDA could reduce planted area by one million acres.
Production is estimated by the analysts survey at 3.719 billion bushels, down about 165 million
bushels from last month. Production could be about that level.
Ending stocks are expected to be ample at 305 million bushels in the U.S. and 90.8 million
tonnes around the world.
The large supply, most of it located in South America, will reduce the need for big U.S. rallies
even if the weather does stay dry. Temperatures so far this month have been average or below
to keep stress at reduced levels.
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 22
WEATHER OUTLOOK FOR SELECT COUNTRIES IN S.E.
ASIA THROUGH AUGUST 14, 2015 COMPILED FROM
GOVERNMENT WEATHER SERVICES IN THE REGION:
The Badan Meteorologi, Klimatologi dan Geofisika (BMKG) of Indonesia (Meteorology,
Climatology and Geophysics Agency) said Sumatra should be generally clear and sunny with
some moderate showers in Aceh, North and West Sumatra. It should be generally cloudy in
Kalimantan and Sulawesi. Papua and Java are also seen as cloudy. Those regions cover the main
growing areas for palm oil, cocoa and coffee. Indonesia is the world’s top producer of palm oil,
the No. 3 producer/exporter of cocoa and one of the top five producers of mainly robusta coffee.
The Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa)
said in its outlook through August 14 that monsoon rains over the northern portion of Luzon
island will be seen early in the week and moderate showers will prevail later in the week. Fair
weather is likely in the rest of the country for all of this week. The Philippines is the world’s
leading producer of coconut oil, and is a major importer of rice, wheat and other food products.
Farmers are tending to crops such as corn, sugar and bananas among others.
The Thai Meteorological Department said in its 7-day forecast said ample rain will be seen in
the country with the north, northeast and east seeing isolated heavy showers. The Southeast
Asian nation is the world’s No. 2 exporter of sugar, which is planted in the north, northeast and
central parts of Thailand. The north and northeast region accounts for nearly 80 percent of rice
grown in the country. Thailand is the world’s top exporter of rice.
The National Hydro-Meteorological Service in Vietnam said the mainly robusta coffee
producing area around Dak Lak and nearby provinces should see steady rain with moderately
warm conditions this week. The northern coffee areas around Son La, which grows a large crop
of arabica coffee beans, will see sunny conditions with some light showers during this period.
Warm rainy will be seen in the main rice growing areas in the southern part of the country.
Vietnam is a leading exporter of rice and rivals Thailand in exports of the grain, a staple food of
large parts of Asia. It is the No. 2 coffee producer in the world.
The Malaysian Meteorological Department said the 7-day outlook in the state of Sabah should
see isolated rain in the week through August 14. It said Sarawak should get isolated rain but that
Selangor will see isolated rain very early and then sunny weather this week. The state of Johor
will likely get isolated showers, sunny weather and then isolated thunderstorms the rest of the
week. All four areas are the leading regions where palm plants are sown in the country, the No.
2 producer of the vegetable oil in the world. The country is also a major producer of cocoa.
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 23
SHORT BITES:
COMMODITY FUNDAMENTALS IN SOUTHEAST
INDONESIA CORN IMPORTS IN 2014/15 AND 2015/16
ASIA:
Corn accounts for 80 percent of Indonesian feed needs, especially in its poultry industry.
Indonesia corn imports are seen at 3.5 million tonnes in 2014/15 and 3 million tonnes in
2015/16. According to the Global Trade Atlas, some 48 percent of corn imports are from
Argentina, around 45 percent from Brazil, 5 percent from India, and 2 percent from the U.S.
VIETNAM COFFEE PRODUCTION, EXPORTS IN 2015/16
Coffee production for the 2015/16 season should hit 28.6 million bags, up around 1.8 percent
from the 2014/15 season, the USDA forecast.
Exports are forecast at 27.04 million bags or 1.62 million tonnes, up 2.3 percent, according to
estimates by the U.S. agriculture attaché in Vietnam.
INDONESIAN 2015/16 COFFEE PRODUCTION
Coffee production in Indonesia is seen rising some 24 percent to 11 million bags in 2015/16
(April/March), according to the USDA.
Of the total, some 9.3 million are robusta beans. Indonesia is expected to produce 1.7 million
bags of arabica coffee, the key ingredient for gourmet and high-end coffee.
Coffee exports are seen at 9.05 million bags in 2015/16. Coffee planted area in Indonesia
remains steady at around 1.2 million hectares.
INDONESIA SUGAR IMPORTS
Raw sugar imports by Indonesia are seen increasing in 2015/16 to 3.1 million tonnes on the back
of a rising population and rising consumption by the country’s food industry.
Sugar consumption in 2014/15 is forecast at 5.5 million tonnes and it is expected to edge up to
5.55 million tonnes in 2015/16. The island of Java’s 48 sugar mills accounted for 63 percent of
Indonesian white sugar production in 2013/14.
Copyright © 2015 by Informa Economics, Inc.
Southeast Asia Commodity Digest
August 10, 2015
Page 24
THAILAND SUGAR EXPORTS
Thai sugar exports are tipped to increase 10 percent to 8.8 million tonnes in 2015/16 because
tariff rates in the 10-member Association of Southeast Asian Nations (ASEAN) will be cut to
nearly zero by December 31.
Thai 2015/16 sugar production is expected to increase to 11.4 million tonnes, from 11 million in
2014/15 due to an expansion in cane plantings by 32,000 hectares.
PHILIPPINE COCONUT OIL EXPORTS
Coconut oil exports in 2013/14 stood at 866,000 tonnes, according to the Global Trade Atlas
(GTA). In 2014/15, they fell to 800,000 tonnes, and would stay at this level for 2015/16.
Coconut oil production was estimated at 1.48 million tonnes in 2013/14, seen slipping to 1.45
million tonnes in 2014/15 and go up slightly to 1.49 million tonnes in 2015/16. The Philippines
is the world’s top coconut producer.
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August 10, 2015
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