Indonesia is witnessing a surge in the importation of low-quality wheat, with recent contracts for 300,000 tons of Black Sea wheat. This move aims to address a shortage in feed grain supply, exacerbated by a severe drought in the previous year. As corn yields plummeted due to El Nino, Indonesia is turning to imported wheat to meet the demand for animal feed.
Rising Demand Amidst Shortage
The delayed planting and reduced yield of corn have prompted Indonesia to increase its wheat imports by at least 10% compared to the previous year. With corn prices soaring to twice the cost of imported wheat, there’s a pressing need for immediate wheat supplies for animal feed production.
Market Dynamics
Indonesian importers have inked deals for low-quality wheat from Ukraine and Russia, taking advantage of competitive prices ranging from $260 to $270 per ton or €241 to €250 per ton, including freight costs. Despite traditionally beginning wheat exports in the summer, Ukraine faced delays this year, allowing competitors like Australia to gain traction in the market.
Competitive Landscape
Australia, renowned for its high-quality wheat, maintains a significant market share, attracting importers with superior product standards. However, Ukraine, despite a late start, managed to increase its wheat exports to Indonesia significantly. While Australian wheat remains dominant, Ukraine has intensified efforts to compete in the market.
In light of Indonesia’s increasing demand for wheat amidst a shortage of feed grain, the market sees a rise in imports, particularly from countries like Ukraine and Russia. Despite challenges posed by delayed exports and stiff competition, Indonesia remains a key player in the global wheat trade, navigating through supply fluctuations to meet its domestic needs.
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