Indonesia will suspend a 5 percent duty on soybean imports until the year-end after makers of tofu and tempeh halted production to protest against surging costs spurred by the oilseed’s rally to a record.
The Finance Ministry will issue a ruling this month that will be effective without delay, Coordinating Minister for the Economy Hatta Rajasa said. The Trade Ministry has also held talks with importers to limit margins, he told reporters.
Indonesia’s decision, and the strike by local food-makers who’d demanded the levy be dropped, reflect the impact in Asia of the worst U.S. drought in more than 50 years, which has pushed soybeans and corn to all-time highs. South Korea’s government said today it’s considering stockpiling soybeans, corn and wheat to cope with rising prices. Goldman Sachs Group Inc. has said soybeans and corn will extend gains in Chicago.
The government will “provide facility and flexibility for tofu and tempeh cooperatives to directly import soybeans” to ensure supplies, Rajasa told reporters in Jakarta. The 5 percent levy on soybean shipments had been in place since January.
Soybeans rallied 32 percent on the Chicago Board of Trade this year as the worst drought since 1956 in the U.S., the world’s biggest grower, hurt supplies. Futures, which reached a record $16.915 a bushel on July 23, traded at $15.92 at 8:37 p.m. in Singapore. Goldman Sachs has a three-month target of $20.
Some Indonesian producers of tofu and tempeh, soybean-based staples, stopped production today after local bean prices surged 33 percent in the past three weeks to about 8,000 rupiah per kilogram ($841 a metric ton), according to The Confederation of Indonesian Tofu and Tempeh Makers Cooperatives. The stoppage came during Ramadan, the Muslim holy month, when followers break daylong fasts with communal meals.
“About 23,000 members in Banten, Jakarta and West Java provinces that halted output this morning will soon resume production,” said Sutaryo, the group’s head of business, who uses a single name. “Supplies of tofu and tempeh will return to normal on Saturday,” he said, adding that the confederation expects the government to maintain soybean prices at about 6,000 rupiah to 7,000 rupiah per kilogram.
The drought in the U.S. may spark a rebound in global food costs through October, the United Nations Food & Agriculture Organization said on July 5. South Korea’s Agriculture Ministry will also seek to temporarily lift import tariffs on soybeans and wheat, according to an e-mailed statement today.
Indonesia, Southeast Asia’s biggest economy, imports about 70 percent of its soybean needs, according to Deputy Agriculture Minister Rusman Heriawan. Tofu and tempeh, derived from soybeans and eaten mainly with rice, the main staple, are key sources of affordable protein. The foods represent about 88 percent of total soybean use in the country, according to the U.S. Department of Agriculture.
Indonesian inflation unexpectedly accelerated in June as food costs climbed, the Central Statistics Office said on July 2. Consumer prices rose 4.53 percent last month from a year earlier after climbing 4.45 percent in May.
The country is expected to import 1.97 million tons of soybeans in the marketing year from October 2012, up from 1.9 million tons a year earlier as consumption will exceed output, the USDA’s Foreign Agricultural Service said in a report in May.
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