July 14, 2011


Indonesia's wheat ample; Indian imports seen as last resort



Indonesia has ample wheat for the festive season and will only seek supplies from India as a last resort, according to the head of an industry group.


Indonesia's wheat grain inventory is estimated at 1.5 million tonnes, enough for three months of consumption that includes the high-demand period during the Ramadan fasting month in August and Eid al-Fitr festivities, said Ratna Sari Loppies, executive director of the Indonesian Wheat Flour Mills Association.


"There's no supply problem ahead of Ramadan. Stocks are OK," said Loppies, adding that imports are expected to rise by 9% this year to six million tonnes versus 2010 and up to 10 million tonnes in 10 years.


"Imports from India may be possible, but it's not a priority because of quality concerns. As far as I know, Indian wheat is not very good," Loppies said.


She added that most companies have signed long-term contracts. "So it's not easy (to shift to Indian imports)," she said.


India has agreed to allow one million tonnes of common rice exports and an unspecified amount of wheat, government sources said on Monday (Jul 11), as it weighs managing millions of tonnes of grain stockpiles with fighting persistently high inflation.


The head of India's grains exporters group dismissed criticisms over the quality of its wheat.


"When India was exporting wheat, we sold about 10 million tonnes to the Middle East, Africa and some neighbours like Sri Lanka. We did not get to hear a single complaint about the quality," said D. P. Singh, president of the All India Grain Exporters Association.


US wheat futures ticked lower on Wednesday after a strong rally, with September wheat falling US$0.01-0.05 cents to US$6.70-1/2 a bushel.


The move by India, the world's second-biggest wheat producer, will pile pressure on the benchmark futures, which have fallen more than 14% since the start of June, dragged down by prospects of larger-than expected Black Sea supplies.


Indonesia, which relies entirely on imports for its wheat, gets around 60% of supplies from Australia, with Canada and the US accounting for about 30%.


Loppies expected Indonesia's wheat grain imports to rise to around 6.0 million tonnes in 2011 from 5.5 million tonnes last year on growing demand in the world's most populous Muslim nation.


"This is due to growth in the biscuit industry, which is using wheat as raw material," said Loppies. "Demand for noodle is also high. We are seeing demand coming mostly from the rural areas."


Southeast Asia's largest economy is set to overtake Japan this year as the top wheat importer in Asia, as higher incomes also spur demand for fast food, helping to support world prices.


Indonesia has 15 flour mills, up from just four in 2000, and millers have installed capacity of eight million tonnes.

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