Indonesia's soybean production forecast to decline

by World Grain Staff
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WASHINGTON, D.C., U.S. — Indonesia’s 2015-16 soybean production is expected to decline to 600,000 tonnes, as Indonesian farmers recover from El Niño conditions, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service said in a March 15 report.

Assuming a return to normal weather conditions, farmers will plant corn and rice in place of soybeans. There is potential, however, for some additional soybean plantings. The report analysis indicates a potential for increased soybean planting in June-August 2016 due to delayed planting in late 2015. Rice and corn plantings were held back by several weeks in some areas following rain delays due to the 2015 El Niño. It is possible that some regions may experience delayed harvests, limiting plantings for June-September harvest. If this occurs, some farmers may opt to plant short duration soy.
The report forecasts 2016-17 soybean production to remain stable at 600,000 tonnes. Despite Indonesia’s emphasis on soybean self-sufficiency and efforts to grow production, the report has yet to observe any changes that would indicate production growth. Low yields and limited profitability from soybeans imply that Indonesian farmers will continue to plant rice or corn.

Indonesian soybean consumption is dominated by human use. U.S. soybeans are preferred in Indonesia due to their uniform size, color and suitability for tempeh and tofu manufacturing, according to the report. It is expected that tempeh and tofu will remain a preferred protein source in Indonesia, especially when considering the rising costs of substitute animal proteins. The total soybean consumption estimate therefore remains unchained at 2.87 million tonnes 2015-16.

Looking to 2016-17, consumption patterns are not expected to change. Considering population growth, the report estimates that consumption will grow to 2.9 million tonnes. Despite rising incomes and a growing middle class, tempeh remains very cost competitive and maintains a popular place in Indonesian diets across social classes.

Indonesia imports approximately 75% of its soybean requirement, the majority originating in the U.S. Global supplies of the oilseed remain high, implying continued low prices and availability to importers.

Recent policy changes have transferred import authority for corn to the Indonesian state-owned enterprise, BULOG. Under this arrangement, BULOG maintains ownership of most imported corn in Indonesia, while private importers act as import agents for BULOG. Although there is discussion that BULOG may apply a similar policy to soybeans, it is believed that such a policy, if implemented, would have little influence on the overall quantity of imported soybean. The report notes that previous efforts to curtail soybean imports have been relatively ineffective, as demand far outweighs local production capacity. As a result, the import estimate remains at 2.2 million tonnes for 2015-16, noting that first quarter imports are on pace to achieve this level. 2016-17 imports are set at 2.35 million tonnes, reflecting the consistent demand of a growing population.

2014-15 ending stocks are revised down from 185,000 tonnes to 149,000 tonnes, based on final data. 2015-16 ending stocks are also reduced slightly, based on lower beginning stocks and low levels of reported exports. 2016-17 ending stocks are estimated at 66,000 tonnes.

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