Canada: China, Indonesia to remain top wheat buyers

Canada’s top two wheat customers are expected to be major buyers again in 2023-24.

The U.S. Department of Agriculture is forecasting China will import 11 million tonnes of the commodity from all suppliers.

That would be a drop from last year’s massive 13.28 million tonne program but well above the five-year average of 6.5. million tonnes prior to last year.

Indonesia is expected to buy 10 million tonnes of wheat, up from 9.57 million tonnes last year and in line with the 2017-21 average of 10.7 million tonnes.

China and Indonesia accounted for one-quarter of Canada’s bulk wheat exports in 2022-23, with China buying 2.97 million tonnes and Indonesia chipping in another 2.14 million tonnes.

The two countries often vie with one another for top spot on Canada’s customer list, and that pattern is expected to continue this year.

“We want to be a big part of both of those markets,” said Leif Carlson, director of market intelligence and trade with Cereals Canada.

China was a major buyer right out of the gates last year.

“They were in the market early after the 2022 harvest and put on a good program over the winter,” he said.

Canada’s Canada Western Red Spring quality is a good match with China’s domestic wheat and with imported product from France and Australia.

“China is a long-term, consistent buyer that does value Canadian quality,” said Carlson.

The USDA’s Foreign Agricultural Service (FAS) cites data from the National Bureau of Statistics of China (NBS) indicating that the country’s summer wheat production fell 0.9 percent in 2023-24, the first decline in seven years due to heavy pre-harvest rains in key growing regions.

The NBS said wheat acres were up 0.4 percent, but yields were down 1.3 percent.

“However, a renowned agricultural firm’s sample survey estimated summer wheat output (was) down by 10 percent,” said the FAS.

The FAS estimates 22 million tonnes of the country’s 136.5 million tonnes of wheat sprouted.

As a result, it is forecasting 37 million tonnes of feed and residual use, up from 31 million tonnes last year.

Wheat is replacing corn in feed rations. The sprouted wheat price was about US$27 per tonne cheaper than corn in September.

Sprouted wheat can replace 100 percent of corn in broiler feed and 10 to 100 percent in hog feed.

“Industry contacts expect massive sprouted-wheat substitution of corn to end by September as the sprouted wheat supply will be depleted by that time,” the FAS said in an Oct. 5 report.

China purchased 9.4 million tonnes of wheat between January and August of 2023. The country is expected to exceed its annual tariff rate quota of 9.636 million tonnes for the first time.

Imported U.S. Soft Red Winter Wheat was $66 per tonne cheaper than China’s domestic wheat in September, while U.S. Hard Red Winter Wheat prices were similar to China’s wheat.

Export Development Canada says Indonesia should be a high-priority market for Canadian exporters going forward.

It is home to the world’s fourth-largest population and a US$1.4 trillion economy.

“With income having grown by 27 percent since 2015, and expected to surge by another 48 percent by 2030, this expansive archipelago is home to a rapidly growing middle class,” EDC’s chief economist, Stuart Bergman, said in a recent commentary.

The country’s economy is expected to grow five to six percent per year over the long term.

It has greater domestic demand than many of Canada’s traditional markets, which are in the later stages of development characterized by older and shrinking populations.

“The sheer size of Indonesia’s domestic market also helps insulate it from regional and global volatility,” said Bergman.

The country’s imports have surged 30 percent since 2015 to $240 billion per year and are expected to grow by seven percent per year over the next five years.

Canada’s exports to Indonesia “skyrocketed” 45 percent last year. It is Canada’s biggest partner in the Association of Southeast Asian Nations (ASEAN) market.

Carlson said Canada’s agriculture industry is well aware of Indonesia’s potential.

“In the cereals sector we have experienced some of that growth and opportunity in the Indonesian market that Export Development has written about,” he said.

He anticipates another year of strong demand for Canadian wheat from Indonesia in 2023-24, especially with Australia expecting a much smaller crop.

Canada will be visiting both Indonesia and China as part of its new crop missions to tell millers about the 2023 crop.

There are also incoming and outgoing technical missions to ensure millers in both countries know how to get the best value out of Canadian wheat.

EDC believes Canada can expand its agri-food exports to Indonesia to match the demands of its growing middle class.

Carlson said the newly announced Indo-Pacific Agriculture and Agri-Food Office will help achieve that goal.

The office, which is a joint venture between Agriculture Canada and the Canadian Food Inspection Agency, is being built in Manila, Philippines.

He said that the $31.8 million project is expected to be up and running in 2024.

Tags: Canada, wheat, buyers, China, exports, импорт, Indonesia