Indonesia is increasing imports of low-quality wheat

2024-02-21 11:08:15
Machine translation
Indonesia is increasing imports of low-quality wheat

Indonesia is increasing imports of low-quality wheat, and recently contracted 300,000 tons of Black Sea wheat, which will keep prices in Ukraine from falling further.


A severe drought caused by the El Nino phenomenon in the second half of last year delayed the planting of corn and sharply reduced its yield, which reduced the supply of feed grain. Therefore, if in 2023 Indonesia imported 10.87 million tons of wheat, then in 2024 it will increase imports by at least 10%.


In recent weeks, Indonesian importers have contracted 300,000 tons of low-quality wheat from Ukraine and the Russian Federation for delivery in February-March at a price of $260-270/ton, including the cost of freight. If agreements for the supply of wheat for the production of flour are concluded 2-3 months before delivery, then currently, in the conditions of a shortage of fodder grain, there is a need for urgent supplies of wheat for feeding animals, since the prices of corn in the country are now twice as high as those of imported wheat, and grain production in the first quarter of 2024 will not be able to meet the needs of feed mills.


Currently, Indonesian corn prices reach $550-600/t, while imported feed wheat is only $260-270/t. According to the National Food Agency, the average price of corn for poultry farmers was 8,700 rupees/kg or $556.6/t on Monday, which is 47% higher than last year's price level.


Atria Brokers experts report that Indonesia ranks 5th among buyers of Russian wheat. Currently, the Russian Federation is reducing prices on world markets by actively exporting wheat, squeezing Ukrainian grain out of it, particularly on the Indonesian market. However, Ukraine still has a chance to intensify supplies and compete with grain from the Russian Federation and Australia.



Traditionally, wheat exports from Ukraine to Indonesia began in the summer and ended in November, while this year deliveries began much later, after the opening of the Black Sea grain corridor. At that time, there were already many competitors on the market, including Australia, so some of the opportunities were lost.


Prices for Australian wheat attract importers, and its quality is better than Ukrainian wheat, so this year Australia will maintain its market share at the level of 50%, Atria Brokers believes.


But despite the late start of exports, thanks to the work of the grain corridor, Ukraine managed to increase wheat supplies to Indonesia in 2023/24 FY compared to 2022/23 FY by 75% to 612 thousand tons, of which 252 thousand tons were delivered in November, and in December - 212 thousand tons.


At the moment, it is not clear how the shares of flour and fodder wheat are distributed in Ukraine's exports. Indonesia imports mainly flour wheat, while in Ukraine this year 65% of wheat is of feed quality.

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