March 15, 2012

 

Indonesia sees growing wheat demand

 

 

Indonesia's imports of wheat and flour will likely expand 6% to 6.6 million tonnes this year, as rising incomes boost food demand, an industry executive said.

 

Purchases from Asia's biggest wheat buyer reached 6.2 million tonnes a year earlier, said Franciscus Welirang, chairman of the Association of Flour Producers in Indonesia.

 

"Every year, the milling capacity increases by 400,000 tonnes," said Welirang, also a director at PT Indofood Sukses Makmur, owner of the world's largest flour mill. Companies producing wheat-flour increased to 18 last year from just four in 1998, he said.

 

Rising purchases may curb an 11 % slump in Chicago futures in the past year. Prices have declined as global production surges to a record, taking inventories to a 12-year high before the next Northern Hemisphere harvest, according to the March 9 estimate by the USDA.

 

Demand in Indonesia, which relies completely on imports, jumped more than 50% in the past decade, surpassing Japan as Asia's biggest importer, USDA data showed. That surge is attracting exporters including the US, Australia and Russia, the top three shippers.

 

Growth in imports will be driven by developing countries, including Indonesia and Vietnam, where incomes and population are rising and consumers are shifting marginally from rice to wheat, the USDA said in its 10-year outlook on February 13.

 

About 85% of Indonesia's imports by volume are wheat and the rest flour, Welirang said, adding that the total is expressed in wheat equivalent.

 

Imports from Australia, the world's second-largest shipper, rose to 3.8 million tonnes in the 12 months to September 2011, from 3.2 million tonnes a year earlier, according to data from the Australian Bureau of Agricultural and Resource Economics and Sciences. That makes Indonesia the biggest buyer of Australian wheat, accounting for 21% of total shipments, it showed.

 

From the US, the largest exporter, purchases surged to 695,194 tonnes from June 1 to March 1, from 555,070 tonnes in the same period a year earlier, USDA data showed.

 

Indofood's (INDF) PT Bogasari Flour Mills is the largest miller in a single location in the world, according to the company's website and the Russian Grain Union. Bogasari has a milling capacity of 4.338 million tonnes at its plants in Jakarta and Surabaya, representing more than half of the nation's total, according to Welirang.

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