A stronger demand from Indonesia's feed mills is expected to boost the country's wheat imports for market year 2015-16 to 8.9 million tonnes, higher than the previous estimate of 7.6 million tonnes, according to a late-July report by the USDA's Foreign Agricultural Service (FAS).
Hence, US wheat exports entering Indonesia will rise slightly to 700,000 tonnes in the same period.
Government restriction on corn imports and local weather impact have render it hard for Indonesian feed mills to fulfill corn demand, forcing companies to turn to imported wheat. A spike in feed wheat import occurred as a result and has been going on since September last year. 22 feed mills are currently importing wheat, the Indonesian Flour Mills Association (APTINDO) revealed.
From July 2015 to May 2016, wheat imports reached an overall amount of 8.2 million tonnes, an increase from 6.7 million tonnes during the period of July 2014 to May 2015, based on data by Global Trade Atlas and APTINDO.
In the government's eyes, the uptrend is seen as a challenge to its self-sufficiency policies for corn. Therefore, in June, the Indonesian Ministry of Agriculture halted the issuing of import recommendations for feed wheat. The move, together with weak exchange rates, will potentially hamper future wheat imports which could fall from the average annual rate of 6-7% to approximately 5%. Thus, Indonesian wheat imports may shrink to 8.5 million tonnes in 2016-17.
The USDA-FAS report also updated feed and residual wheat consumption for 2015-16 to around 1.3 million tonnes, compared to a previous estimate of 450,000 tonnes. In the same period, however, feed wheat consumption may fall to 550,000 tonnes due to cessation of feed wheat import recommendations.
Indonesia's corn production in 2015-16 is expected to be lower at 9.3 million tonnes, compared to the previous estimate of 9.4 million tonnes. The drop is due to good weather which encourage the cultivation of paddy instead of corn in areas with sufficient rain as well as feed mills' preference for imported wheat.