High feedstock prices may hit Indonesia’s poultry market despite cost controls

As Jakarta steps up efforts to address feedstock cost pressures for poultry farmers in Indonesia, market participants said this week that the price relief could be short-lived amid dwindling active domestic corn harvest supply and temporary support for downstream demand ahead of the archipelago's year-end holidays.

The domestic corn price hit Rupiah 7,000/kg ($425.82/mt) in late August, market sources said, much higher than imported corn prices in Asia. Platts, part of S&P Global Commodity Insights, assessed CFR Northeast Asia corn at a month's high of $238/mt Aug. 25, but more than $180/mt below domestic corn prices in Indonesia.

Market participants said domestic prices have declined since late last week and have been trading around Rupiah 6,300-6,400/kg ($383-$389/mt), as the government instructed corn traders to release their stocks into the market to cool prices.

However, prices remain well above Asian import prices. Platts assessed CFR Northeast Asia corn at $236/mt Sept. 10.

Cost control measures

To manage feed ingredient costs, Indonesia, through its government-affiliated livestock company Berdikari, would bring in 600,000 mt of feed wheat imports in 2025 amid tight supply of the domestic corn crop, multiple market participants said.

A Surabaya-based feed miller said most, if not all, of the imports had been purchased by feed mills and major poultry integrators.

At the same time, the Indonesian government launched the Food Supply and Process Stabilization program, allocating 52,400 mt of feed corn at a subsidized price of Rupiah 5,500/kg to support poultry farmers.

The measure would provide price relief, given the market price for corn is Rupiah 6,599/kg, 13.78% higher than the consumer-level sales reference price of Rupiah 5,800/kg, the National Food Agency said Sept. 8.

Poultry prices

In addition to the cost control measures, farmers might also get some support from firming prices in the poultry sector, notably broiler chicken and egg prices.

The average price of broiler chickens has risen from Rupiah 17,000/kg a month earlier to Rupiah 20,000/kg Sept. 3, a local poultry integrator said.

Another local industry source said demand for chicken meat was rising ahead of the year-end holidays. Egg prices have also increased, with average costs rising from Rupiah 26,000/kg a month earlier to Rupiah 28,000/kg Sept. 10, according to the Jakarta Commodity Information.

A key factor was the reduced supply of day-old chicks due to delays in the harvesting process at the hatchery stage, the poultry integrator said. Still-elevated feed costs were also contributing to higher prices of day-old chicks for poultry farmers.

Upside risk to feedstock prices

However, the local source said healthy poultry prices and the subsidy may be inadequate as "the allocated volume falls short of market needs."

Additionally, it might be challenging to maintain domestic corn prices at the present level of Rupiah 6,400/kg as volumes from the remaining active harvest region, Makassar, begin to dwindle, local industry sources said.

"The last harvesting area is Makassar now. Its supply [has] started to dwindle. So, soon the price in Makassar [will] be back to Rupiah 6,000 plus/kg again, meaning traders there cannot sell below Rupiah 6,400/kg [equivalent] to Java," the Surabaya-based feed miller said.

"East Java will only have its harvest in November. Hopefully, [corn] stocks can last till feed wheat imports from Berdikari start to come and help relieve the price," the miller added.

Furthermore, the Central Statistics Agency had projected a 21.57% drop year over year in Q3 corn production to 3.6 million mt due to pests, crop diseases and unfavorable weather. This domestic corn is primarily used for animal feeding.