Asia's noodle hunger drives demand

05 Feb, 2015 09:20 AM
Comments
12
 
It's a bullish story for Australian wheat ... there'll be more demand in 2020 than ability to supply

AUSTRALIAN wheat farmers will face an increasing challenge keeping up with their neighbours' appetite for bread and noodles.

Demand from Indonesia, the Philippines and three other Southeast Asian nations is set to jump 40 per cent to 13.2 million tonnes by 2020, said Greg Harvey, chief executive officer of Interflour Group, one of the region's biggest flour millers.

That may outpace Australia's ability to supply the wheat variety used in soft bread and noodles, he said in an interview in Singapore. Australia is the world's fourth-biggest wheat shipper.

Faster growth

Faster growth and an expanding population are boosting consumption of everything from wheat and sugar to cooking oils in the region, which has more people than the European Union. Indonesia will become the world's second-largest wheat importer this year and has overtaken India as the top user of palm oil, the US government estimates. The US, Canada and Russia could fill any shortages in Australian supply, he said.

"It's a bullish story for Australian wheat," said Harvey, whose company is a venture between Salim Group in Indonesia and CBH Group, Australia's biggest grains shipper.

"There will be more demand in 2020 than the ability to supply, at least on paper. That's a good problem to have."

Wheat in Chicago entered a bear market last month as world stockpiles of grains excluding rice head for the highest since mid-1980s, the International Grains Council estimates. Prices fell 13 per cent this year to $US5.1575 a bushel on Wednesday.

Hottest spring

Western Australia and South Australia, which are top producers of the low-protein white wheat used in noodles and soft bread, are the country's main suppliers to south-east Asia, Harvey said.

His projections assume that farmers will have difficulty increasing exports from the 11.1 million-ton annual average over the past five years.

Dry weather and limits on the amount of land suitable for cultivation are already curbing supplies.

Total wheat shipments from Australia may drop 7.2 per cent to 16.99 million tons in the 12 months to June 30, the lowest in five years, after the hottest spring on record, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.

While wheat imports by south-east Asian countries from all origins will reach 17.75 million tons in 2014-2015, or 8.6 per cent more than the average in the past five years, exports from Australia are estimated to be 8.2 per cent below the five-year average, US Department of Agriculture data show.

"We have a productivity growth rate at about 1 per cent a year and I hope this will continue," said Simon McNair, chief executive officer at Australian Grain Growers Co-Operative. "There's a finite amount of farmlands. There's competition from other agricultural products like cattle, and other crops."

Rising consumption

South-east Asian nations are still expanding. The International Monetary Fund forecast last month that growth in the five biggest economies will accelerate to 5.2 per cent in 2015 and 5.3 per cent in 2016, from 4.5 per cent last year.

Demand for wheat flour will increase at the fastest pace in Indonesia, Vietnam and the Philippines, with the average exceeding 7 per cent a year in the decade through 2020 according to Interflour's Harvey. Consumption per person in the region will climb to 29 kilograms in 2020 from 20 kilograms last year, he said.

Page:
1
SMH
Date: Newest first | Oldest first

READER COMMENTS

Philip Downie
5/02/2015 1:58:56 PM

Low protein white wheat from SA used for needles and soft breads, hard to believe. So what is "soft bread" not very descriptive how about process and protein content (hard to believe it is low) and grain hardness. But GRDC are spending something north of $16 mill a year to find out, so must be right.
James
5/02/2015 9:36:20 PM

They need food more than coal. Better mine more of the highly productive areas like the liverpool plains if the world population is to be controlled by this measure. This might be wrong but its the only argument that has made sense yet.
Unhappy cocky
6/02/2015 6:22:43 AM

Philip, once again you have your meagre knowledge get in the way of truth. Where did you get a figure of 16m from, quite clearly you are wrong again
Philip Downie
6/02/2015 11:17:29 AM

Unhappy, try their 2013-14 report 16.7 mill. how else do you think I would come up with that figure. By "magic". it's not about meagre knowledge, more facts as presented. You can interpret my thoughts about your knowledge, not kind.
Zero till
6/02/2015 6:29:06 PM

If it was had needles in it it wouldn't be soft bread!
Old mate
9/02/2015 5:41:13 AM

Oodles of Noodles not wheedles of needles? ;-)
Philip Downie
9/02/2015 11:43:14 AM

Sorry for the typo, good that we focus on the important things.
Jock Munro
10/02/2015 3:29:50 AM

According to my information, this is a prime example of the merchants (who now control the Australian wheat industry) leveraging Australia's quality reputation by blending white bread wheat into noodles in order to make a quick dollar at our expense. It is little wonder that our overseas customers are complaining about our lower quality and consistency since deregulation. They are also telling us that the relative value of our wheat has declined.
Mendezey
11/02/2015 8:27:18 AM

Jock do you ever have a positive comment or something new to contribute to these forums. We understand you don't like deregulation. Market demands what it needs, if flat bread using low protein wheat is what market demands then blend to meet the market.
Jock Munro
11/02/2015 10:55:27 AM

You are obviously a middleman merchant, mendezey. Where will your attitude leave the Australian wheat industry when there is a global glut and we have lost our quality advantage?
1 | 2  |  next >

POST A COMMENT


Screen name *
Email address *
Remember me?
Comment *
 

COMMENTS

light grey arrow
I'm one of the people who want marijuana to be legalized, some city have been approved it but
light grey arrow
#blueysmegacarshowandcruise2019 10 years on Daniels Ute will be apart of another massive cause.
light grey arrow
Australia's live animal trade is nothing but a blood stained industry that suits those who