September 22, 2011


US wheat imports to Indonesia may decline in 2012



Increased competition, together with increasing production from Canada and Australia, may cause US wheat exports to Indonesia to decrease next year, according to a senior official at US Wheat Associates on Wednesday (Sep 21).


According to Reuters, Michael Spier, the association's vice president for South Asia, said the US shipped about 800,000 tonnes of wheat to Southeast Asia's biggest economy.


US Wheat Associates is an organisation funded by US wheat producers that helps develop export markets.


"We have seen our market share increasing, but obviously Australia does have a freight advantage," Spier said. "Australia's production is back up. Canada's production is up, which also competes in that high protein level."


Indonesia's wheat imports are expected to rise to around six million tonnes in 2011 from 5.5 million tonnes last year, due to higher incomes and rising fast-food demand.


This will make the archipelago of 17,000 islands Asia's top wheat importer.


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


Western Australian wheat suppliers are best placed to meet Indonesian demand, analysts say, as geographic proximity and consumers' preference for premium and standard white wheat head off competition from mainly soft white and hard red wheat producers in the US and Canada.


Premium wheat from Western Australia, used to make bread and noodles, is also a favourite of other Asian countries such as Vietnam and Taiwan.


"Our opportunity for the US is in the high protein wheat and soft white wheat. Those are where we see some growth potential for exports in Indonesia, especially where you are seeing the expansion of emerging growth and bread products," added Singapore-based Spier.


Earlier this month, the USDA raised its estimate of 2011/12 domestic wheat ending stocks to 761 million bushels from 671 million. Analysts had been expecting 663 million. USDA cut its wheat export forecast by 75 million bushels.


Global wheat output is seen slightly higher year on year, at about 677 million tonnes this year, according to the International Grains Council.


US wheat and soy futures ticked higher on Wednesday (Sep 21) despite escalating worries about the global economy and the IMF warning the US could slip back into recession.


"For wheat, it is possible if we do have another economic dip, it could reduce consumption," Spier said.


Roughly 50% of US wheat production is consumed domestically, and the rest exported. The Philippines is the US biggest Southeast Asian importer, accounting for almost 50% of shipments within the region, Spier added.


Southeast Asia accounts for about 12% of global wheat imports, up from 9% in 2009.


Millions of tonnes of low-priced Russian wheat have surged onto global markets since Russia ended an export ban in July, but Spier said he did not expect the grain to make inroads in Asia.


"As far as in Asia, particularly Southeast Asia, where buyers and mills are more quality conscious, I do not think we will see much of an impact from the Russian wheat," he said.

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