17th March: SINGAPORE - Philippine feed mills are expected to import more corn and soymeal in 2006, as the absence of bird flu in the country so far has kept poultry consumption high, while there is an expected shortfall in domestic corn output, a senior industry official said.
"(The) bird flu (epidemic) has fortunately spared the Philippines, and our poultry consumption has continued to grow unhindered," said Ricardo M Pinca, vice-president of the Philippine Association of Feed Millers, Inc.
Over the past several months, bird flu has affected large sections of poultry population in a number of Asian countries, notably China, Vietnam, Thailand, Indonesia, India and Myanmar.
With the spread of the outbreak forcing a reduction in the consumption of chicken and eggs, it has led to a drop in demand for corn and soymeal, both important ingredients in poultry feed.
Pinca said the Philippines' bird flu-free status has also led to some export orders, but he was unable to provide details.
Pinca said a key reason for expecting higher corn imports by Philippine feedmillers this year is an expected shortfall in domestic corn production because of adverse weather conditions.
Analysts added that higher prices of local corn also prompted many feedmillers to import corn.
Pinca said corn imports by feedmillers in 2006 are expected to touch 191,000 metric tons, the maximum amount millers can import in a year at the concessional duty of 35%. Importing corn beyond this quota will attract an import duty of 50%.
Feed corn imports in 2005 were slightly less than 50,000 tons, said Pinca.
Pinca said Philippine importers are currently buying most of the corn from China as freight costs from Chinese ports work out to be much lower than rates from ports in the U.S. and Argentina.
"Corn shipments are still coming in from China. Once that option runs out, we will rely more on other sources," said Pinca.
China Yet To Issue Corn Export Quotas
Meanwhile, the Chinese government is yet to issue new corn export quotas after earlier quotas expired Feb. 28.
Rising local prices of corn in China have made most analysts skeptical about the country issuing corn export quota anytime soon.
Under Chinese law, only exporters with quotas issued by the government are allowed to export corn.
Pinca said apart from corn, soymeal imports were also expected to exceed 2005imports of 1.5 million tons.
With increased possibility of the Philippines exporting more poultry this year, there will be higher demand for both corn and soymeal, he said.
The opening of a new port facility in Philippines' Luzon island with the facility to handle larger volumes of bulk grain will also help boost feed grain imports, Pinca said.
The new terminal at Luzon will be able to discharge 16,000 tons of grains per day while the current facility (also in Luzon island) can only handle 10,000 tons/day.
"The faster the grain can be unloaded, the lower the freight cost works out be, so our imports can become much more cost-effective with the new terminal in full operation," said Pinca.
While the new terminal is still under construction, it has already started receiving some feed wheat and soymeal shipments. The facility is expected to be fully operational in the coming months.
According to a US Department of Agriculture report in February, the new port facility will not only serve Philippine grain importers, but also act as a regional trans-shipment hub for grains.
Pinca said spot ocean freight costs had softened considerably over the last few months, especially along the crucial Pacific Northwest-Philippines route.
Current spot rates for panamax-sized shipments from Pacific Northwest to the Philippines is around $38-$39/ton, down from $60/ton some time back.
"We are hopeful the current trend (of softening ocean freight cost) will continue, if Chinese demand for freight remains stable and fuel prices don't rise too much," said Pinca.