One interesting piece of news in Thursday's USDA reports was a one million metric ton hike in the forecast for Indonesia's imports of wheat to 12.5 mmt, a move that vaults that country into the No. 1 spot as the world's largest wheat importer. Current forecasts place Egypt in the No. 2 spot at 12 mmt.
The USDA notes both food and feed demand as behind the move, with rising income levels moving diets towards trends seen in Western nations. The USDA notes feed wheat import restrictions are in place, while lower quality human consumption wheat is also being shifted towards use in feed rations.
The news could be viewed as mixed for Canada. While Canada exports very little to Egypt, the country has been a traditional supplier to Indonesia. At the same time, the USDA notes challenges for traditional suppliers to Indonesia, which rank from largest to smallest -- Australia, Canada, Ukraine and United States, as Ukraine and Russia make bigger inroads into this market. Data for the 2017/18 crop year shows a shift in the order of suppliers, from highest to lowest -- Ukraine, Australia, Russia, Canada, and the U.S.
While timing differences exist, the black line on the attached chart shows Canada's crop year exports (August through July) as a percentage of the USDA's annual Indonesia import estimate (July through June). This has fallen from a recent high of 20% in 2014/15 to 14.8% in 2016/17. So far, 2017/18 Statistics Canada data shows 676,876 metric tons of wheat has been shipped to Indonesia in the August-through-December period (includes wheat and durum), which is 7.9% higher than the same period last crop year and is 1.8% higher than the five-year average.
Today's reports shows the challenges faced in the global market, with growing global demand increasingly satisfied by lower quality, lower-priced Black Sea supplies. At the same time, today's report showed an upward revision in the USDA's forecast for Canada's all-wheat exports. This forecast volume was hiked 500,000 mt to 22.5 mmt, which is 600,000 mt higher than AAFC's most recent estimate and would be the largest exports achieved in three years.
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