Crop on: Australia back on top as Indonesia’s biggest wheat supplier for the first time in three years

Australia has regained its title as Indonesia’s biggest wheat supplier for the first time in three years, seizing the top spot from Canada and the Ukraine thanks to a combination of high freight rates and bumper crops. More than 3.5 million tonnes of Australian wheat was exported to Indonesia in 2020-21, with hopes it could be 4 million tonnes in 2021-22. The figures far exceed the one million tonnes exported to Indonesia in 2019-20 after the prized trade was stymied by low wheat production and ferocious international competition. CBH chief marketing and trading officer Jason Craig attributed the increase to high fuel prices and freight rates making Australia and its proximity to Asia competitive. “The freight differential between the Black Sea and Australia, into Indonesia, has increased significantly, which is making us more competitive,” he said. Once Australia’s biggest wheat market, Indonesia bought 4Mt of milling wheat worth $1 billion a year from 2013 to 2018. The volume plummeted between 2017 and 2020, hitting rock bottom in 2019-20 when Indonesia bought just 1Mt from Australia. The USDA’s latest Indonesia Grain and Feed Update revealed that nearly 33 per cent of the 9.5 Mt of wheat imported by Indonesia during the 2020-21 marketing year — July 2020 to April 2021 — was from Australia. Ukraine was the second-biggest supplier, at 28 per cent, while Canada was at 23 per cent. Mr Craig said he believed Australia could grow to 40 per cent market share in Indonesia in 2021-22, with a bumper 32.6 million wheat crop forecast for WA this harvest. “Going back to 2016-17, Australia sent (a record) 5Mt to Indonesia,” he said. “At 3.5Mt, we have a bit more to go to get to that record, but the demand sets us up very well for the upcoming crop.” Mr Craig said regaining market share in Indonesia was “very positive for the Australian grains industry”. “This year, Australia is estimated to put about 3.5Mt into Indonesia and we represent about 35 to 40 per cent of its imports,” he said. “The last time we were sending these volumes there was 2016.” Australian Grains Export Innovation Centre chief economist Ross Kingwell said there was a perfect combination of factors driving demand for wheat. He said last year’s record national wheat crop — 33.7 million tonnes including 16.6 million tonnes from WA — meant growers’ cost of production fell, allowing their wheat to be “attractively priced”. “Australia is on track to strongly re-engage with Indonesian wheat buyers and wheat imports in 2021-22,” Mr Kingwell said. “It is quite foreseeable, if the prospective large harvest eventuates this year, that wheat exports to Indonesia could be around 4 million tonnes.” Mr Kingwell echoed Mr Craig’s comments that freight rates had played into Australian farmers’ hands with a “strong upward movement” favouring Australia’s “strong re-entry” into the market. “The increased cost of sea freight advantages the sale of WA grain into Indonesia and disadvantages more distant suppliers such as the Black Sea region and Argentina,” Mr Kingwell said. A smaller wheat harvest across the United States and Canada and low stocks in key exporting nations were also playing a role, he said. “Drought conditions in cereal producing regions of the USA and Canada will draw grain into livestock feeding and away from export markets,” he said. WA wheat is suited for use in noodles and as a key filler ingredient in bread products. Indonesia — the world’s second-biggest noodle market — sells 13 billion packets of noodles a year.