Miller Magazine Issue: 115 July 2019

INDONESIA 83 MILLER / JULY 2019 millers. Despite increased corn production, growth in demand from the feed sector will continue to force feed mills to rely on imported wheat. As a result, post expects flour mills to import approximately 2 million tons of wheat for re-sale to domestic feed mills. The significant expansion of flour mills has led to fierce competition in the market and has become one major factor in determining the source for imports. The surge in wheat imports to replace high-priced domestic corn in feed rations, as well as improved quality of wheat from the Black Sea, have altered the origins of Indonesia’s wheat imports. Australia and Ukraine currently dominate the market with 31 and 21 percent market share, respectively. Canada has maintained market share at 16 percent, followed by Russia with 14 percent market share. The growth of Ukrainian wheat imports, along with the sharp in- crease in Russian imports, has pushed U.S. wheat to fifth largest supplier, although overall market share has remained near 10 percent. While much of the Black Sea wheat was initially imported for the feed sector, mills are increasingly blending the lower quality wheat with imported wheat from the traditional suppliers. This blend is to meet demand for medium protein flour, which accounts for 50 percent of the total flour market. Beginning in 2015, imports from Ukraine increased significantly. Millers also report that in addition to competitive pric- es, Ukrainian wheat quality has significantly improved in recent years, allowing for higher rates of blend- ing. Similarly, Russian wheat exports to Indonesia increased by 579 percent in 2017. These increases have come at the expense of Australian wheat, which in addition to price, has had inconsistent supply due to weather related problems. Most flour mills expect to continue sourcing Black Sea wheat in the coming years. Black Sea wheat is