JAKARTA: Indonesia has ample wheat stocks ahead of the festive season and will only turn to grains from India as a last resort, the executive director of the Indonesian Wheat Flour Mills Association said on Wednesday.
Indonesia's current wheat grain inventory was estimated at 1.5 million tonnes, enough for three months of consumption, which includes the high-demand period during the fasting month of Ramadan in August and the Eid al-Fitr festivities, said Ratna Sari Loppies.
"There's no supply problem ahead of Ramadan. Stocks are OK," Loppies told Reuters, adding that imports are expected to rise by 9 percent this year to 6 million tonnes versus 2010.
"Imports from India may be possible, but it's not a priority because of quality concerns. As far as I know, Indian wheat is not very good," said Loppies.
India has agreed to allow 1 million tonnes of common rice exports and an unspecified amount of wheat, government sources said on Monday, as it weighs managing millions of tonnes of grain stockpiles with fighting persistently high inflation.
"Also, most people have signed long-term contracts, so it's not easy (to shift to Indian imports)," she added.
US wheat futures ticked lower on Wednesday after a strong rally, with September wheat falling 1-1/2 cents to $6.70-1/2 a bushel.
Indonesia, which relies entirely on imports fr its wheat, gets around 60 percent of supplies from Australia, with Canada and the United States accounting for about 30 percent.
Loppies expected Indonesia's wheat grain imports to rise to around 6.0 million tonnes in 2011 from 5.5 million tonnes last year on growing demand in the world's most populous Muslim nation.
"This is due to growth in the biscuit industry, which is using wheat as raw material," said Loppies. "Demand for noodle is also high. We are seeing demand coming mostly from the rural areas."
Southeast Asia's largest economy is set to overtake Japan this year as the top wheat importer in Asia, as higher incomes also spur demand for fast food, helping to support world prices.
Indonesia has 15 flour mills, up from only four in 2000.
Listed firms that could gain from any rise in Indonesian wheat consumption include Indofood Sukses Makmur, Singapore's Wilmar International and Malaysia's PPB Group .
Copyright Reuters, 2011
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