Indonesia's state procurement body Bulog is set to resume soybean imports for the first time in 15 years, industry officials said, with the agency poised to sign the first of many deals to supply domestic food producers.
As part of reforms agreed with the International Monetary Fund in the midst of the 1997-1998 Asian financial crisis, Bulog was stripped of several monopolies in trading food commodities and left with only rice.
But after global food prices spiked last year, the Indonesian government temporarily scrapped its 5 percent soybean import tariff and agreed to extend Bulog's role beyond the single grain in order to build bigger food stockpiles.
"Bulog and GAKOPTI (Indonesian joint cooperative of tempeh and tofu producers) will sign a soybean sales contract for 21,900 tonnes," GAKOPTI Chairman Aip Syarifuddin told Reuters on Thursday, adding that it would be for imported supplies only.
Tempeh, a pressed soybean cake rich in protein, is a staple of the Indonesian diet.
Indonesia's soybean imports are relatively small compared to top buyer China, but as wealth increases and eating habits change, shipments are likely to steadily climb. Total soybean imports into Indonesia will hit 1.8 million tonnes this year, according to industry estimates.
The country meets about 70 percent of its annual needs of the oilseed through imports, mainly from the United States. It was not clear from where Bulog would be importing soybeans for this first deal.
Bulog did not respond to requests for more information but a source close to the matter confirmed a deal would be signed within one week from Thursday.
The move by Bulog is unlikely to have a major impact on international soybean markets, but it is likely to cause concern among Indonesia's top soybean importers FKS Multi Agro Tbk , Sungai Budi Group and Cargill Inc.
Cargill was not immediately able to say how any GAKOPTI-Bulog deal might impact its imports of the oil bean.
GAKOPTI members will be able to buy Bulog's soybeans at a price of 7,450 rupiah ($0.75) per kg, said Syarifuddin, adding that similar deals for soybeans may be struck in the future.
The price is equivalent to about $20.40 a bushel.
Last year a devastating drought across the U.S. grain belt curbed global supplies and pushed benchmark Chicago soybean futures to a record high.
Chicago soybeans are still being supported by razor-thin U.S. supplies with old-crop prices quoted at $15.34-3/4 a bushel, a premium of about $2.59 a bushel over the new-crop values. U.S. soybean prices have come under pressure this year on forecasts of a rebound in production.
The first Bulog soybean supplies are expected to become available in August, said Syarifuddin, whose GAKOPTI members buy about 1.6 million tonnes per year.
Late last year, Bulog officials sounded out U.S. government officials about securing soybean imports. In May, Indonesia's top soybean importer FKS Multi Agro said the agency had not been able to make any inroads yet in the import market.
