News last update:6 Aug 2012

Indonesia feed firms benefit from crisis

Poultry feed producers in Indonesia are benefiting from the global financial crisis as prices of their ingredients fall, the industry association chairman said.

Corn has slumped 52 percent from its record $7.9925 a bushel June 27 and soybean meal tumbled 45 percent from its peak July 3 as global credit markets froze, depriving companies of financing, slowing economic growth and cutting commodity demand.

"We're wondering what will happen in the longer term,'' said Budiarto Soebijanto of the Indonesian Feedmill Association. "What worries us is if the crisis hurts the banks as there will be a liquidity problem and it will be hard for us to get loans for expansion and letters of credit to finance trade."

Indonesia has joined countries in efforts to prevent the global financial crisis that has toppled U.S. and European banks from spreading. The government of the $433 billion economy will allow commercial banks to use loans as collateral, cut reserve ratios and ease accounting rules in a bid to ease credit access. The global loan crisis will not affect domestic feed demand as long as the economy stays strong and stable, Soebijanto said.

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