Asian demand for commodities to fall

01 July 1998

Asian demand for commodities to fall

TURMOIL in Asian economies will have a marked impact on world markets for important commodities this year and next, according to the United Nations Food and Agricultural Organisation (FAO) in its latest annual review.

It says economic problems in Indonesia, Japan, Korea, Malaysia and Thailand will affect agricultural commodities in three ways. A sharp contraction of incomes across the region will cut import demand; currency depreciation and the greater availability of exportable supplies will fuel increased export competitiveness; and reduced incomes in other regions closely linked to Asian economies will cut worldwide demand for agricultural commodities.

It says wheat and rice imports are unlikely to shrink but imports of coarse grains by the affected Asian countries are expected to be less than 2-3 million tonnes.

Livestock products will be hit and demand for oilseeds, oil cakes and meals is likely to fall.

The FAO paints a rosier picture for Asian exporters of tropical fruits. Collapsed freight rates to Europe from Asia have given a boost to the regions competitiveness and could help it win market share from African and Latin American exporters.

  • Financial Times 01/07/98 page 43

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