Indonesia's wheat imports from the United States may grow by 10 percent in 2007/2008 from the previous year because of tight supplies from Australia, a US industry consultant said on Tuesday. Indonesia imported 731,300 tonnes of wheat from the United States, the world's largest wheat exporter, in the 2006/2007 marketing year.
It jumped four-fold from 175,200 tonnes in the 2005/2006 period, data from US Wheat Associates shows. "If Australia's wheat harvest is not very good, we have a very good chance. We can say growth of 10 percent is expected for exports," Hussein Baron Sutadisastra, consultant for US Wheat Associates, told Reuters in an interview.
"There are three-four new flour mills that will open. So Indonesia's wheat imports could be higher." Australia, the world's second largest wheat exporter after the United States, normally supplies 50 percent of wheat import demand from Indonesia's flour mill industry. But imports from Australia fell to around 20-30 percent in 2006 as persistent drought cut the country's wheat output, said the Indonesian Flour Mills Association. On Tuesday, Australia cut its outlook for the new wheat crop to 15.5 million tonnes, down 31 percent from its June prediction.
GROWING DEMAND Growing demand from new flour mills and the food industry, which increasingly needs high-quality wheat flour, will also help boost demand for US wheat, said Sutadisastra.
"We expect demand to grow because eating habits are changing toward flour-based food such as noodles and bread from rice because they are cheaper than rice now," Sutadisastra said. "Biscuits are also growing popular because they are cheap and practical." Indonesia imports mostly high-quality Hard Red Spring and Soft White wheat types, which are used as blending in production of noodles, biscuits and bakery.
The Indonesian Flour Mills Associatithe Southeast Asian country is likely to import 4.6 million tonnes of wheat this year, up from 4.3 million tonnes in 2006. But Sutadisastra said the country's imports could surpass 4.7 million tonnes. In the early 1970s, US wheat accounted for 80 percent of Indonesia's wheat imports, but US wheat exports slowly fell to virtually zero in the mid-1990s due to competition from Australia and Canada.
Sutadisastra said it was unlikely the United States could dominate the wheat imports market as it did in the 1970s because of competition from Australia. The closer distance between the two countries makes Australian wheat cheaper.
"Indonesia is a big market, but very price sensitive due to low selling flour prices compared to other countries," Sutadisastra said. "We can't compete on price because our prices depend on supply-demand, but we can compete on quality."
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