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Articles of Interest- Monday, October 21, 2019

Articles of Interest- Monday, October 21, 2019

Indonesia Slowly Adapts to Wheat Market

Farm Weekly – 10/21/2019

MILLENNIALS, or generation Y, are predicted to take the lead of Indonesia’s economy, including its wheat flour market, over the next five years. Deputy director PT Indofood Sukses Makmur Tbk and Indonesian Flour Millers APTINDO representative Erwin Sudharma, who gave a keynote presentation at the Grains Industry Association of Western Australia forum this month, said that small medium enterprises made up 66 per cent of Indonesia’s wheat flour customers, while the remaining market was shared by Indonesia’s large and modern industry, including its publicly listed companies. “Most of Indonesia’s small medium wheat flour enterprises start out as a hobby in the person’s home and progress to a proper income and business as they begin to take routine orders from friends and local members of their community,” Mr Sudharma said. “The small to medium enterprises in Indonesia look for consistent quality of their flour, price is quite important, as well as availability.

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Smallest National Wheat Crop in a Decade

Queensland Country Life– 10/21/2019

AnchorDrought has slashed the national wheat harvest to the smallest in a decade according to the latest forecasts. National Australia Bank is the latest in a slew of organisations to cut its forecast for Australia’s wheat crop. NAB cut its forecast for Australia’s 2019 wheat harvest to 15.5 million tonnes down from 17.0mt last month, citing heat, the dry spring and frost. As harvest cranks up in WA and SA, Rabobank lowered its forecast for Australia’s 2019 winter crop to 27.7mt, down 6mt or 17 p er cent from last month. It forecast Australia’s wheat crop to fall to 15.8mt, well below last year’s drought reduced crop of 17.3mt. It’s the dramatic turnaround in WA’s crop fortunes since last year which brought on the most recent write-downs, whereas Queensland and NSW grain farmers have been grappling with drought for the past three seasons.

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Trump Says He Hopes US-China Trade Deal Will be Signed by Mid-November

Reuters– 10/18/2019

U.S. President Donald Trump on Friday said he thinks a trade deal between the United States and China will be signed by the time the Asia-Pacific Economic Cooperation meetings take place in Chile on Nov. 16 and 17. Chinese Vice Premier Liu He will provide Beijing’s perspective on the progress of the talks in a speech on Saturday, according to a tweet from editor-in-chief of the Global Times, a tabloid published by the People’s Daily of China’s ruling Communist Party. “I think it will get signed quite easily, hopefully by the summit in Chile, where President Xi and I will both be,” Trump told reporters at the White House, without providing details…The White House has announced that China agreed to buy up to $50 billion of U.S. farm products annually, as part of the first phase of a trade deal, although China seems slow to follow through. The so-called phase 1 deal was unveiled at the White House last week during a visit by vice premier He as part of a bid to end a tit-for-tat trade war between Beijing and Washington that has roiled markets and hammered global growth.

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Indonesia’s Wheat Importers Weigh Their Options for IMO 2020

S&P Global – 10/21/2019

As freight rates rise ahead of IMO 2020, feed buyers and flour millers in Southeast Asia are weighing wheat competitiveness between the major origins. While IMO 2020 will give Australia an additional freight advantage due to its closer proximity, freight alone may not be enough to restore its competitive edge in Southeast Asia, where buyers have cultivated a taste for cheaper wheat from the Black Sea and Argentina. As a result, the FOB price spreads will be crucial in shaping overall wheat competitiveness in the region. S&P Global Platts estimates that for Australia to regain its lost market share in the region, the Australian Premium White FOB prices can be at a maximum of $25/mt higher than Black Sea 12.5% protein FOB wheat prices, which is the equivalent of the anticipated freight differential in an IMO 2020 marine fuel compliant environment.

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Wheat Prices Continue to Show Strength

AgUpdate – 10/19/2019

There is still some strength in spring wheat prices, according to Erica Olson, marketing specialist for the North Dakota Wheat Commission. “Today (Oct. 15), the Minneapolis December futures were around $5.50, so that has pushed up cash prices a bit from two weeks ago,” said Olson, adding that most of those prices range from $4.50-$4.90, which is up about 20 cents. “Obviously we’d like to see them higher,” she said. “One thing so far is we haven’t been seeing improvement in basis and we’re expecting that we might eventually see that for some of the higher quality wheat out there,” she continued. “When you compare our local cash prices to prices at the port, they’re $2-$3 higher (at the port), so we’re not seeing all that strength come back to the cash market.”

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Source: U.S. Wheat Associates