Lower Indonesian corn output prompts Berdikari to consider higher Russian feed wheat imports in Q4

Rising expectations of a lower corn production in Indonesia during 2023 amid unfavorable weather conditions have prompted state-owned livestock company Berdikari to step up interest in importing feed wheat from Russia to minimise the impact of lower corn supply in the feed market.

Berdikari, through the Indonesian Feed Miller Association (GPMT), has requested Indonesian feed millers to consolidate the orders for Russian feed wheat which will be sold to the feed millers at Rupiah 5,635/kg CFR and they have up to 1300 hrs local time to submit their demand, according to market sources. Berdikari is expected to purchase up to four shipments of 60,000 mt of Russian feed wheat through September to December shipments, totalling of up to 240,000 mt in the current order consolidation. The discharge is expected to be at the ports of Cigading, Ciwandan and Surabaya.

Platts, part of S&P Global, assessed FOB Black Sea wheat (Russia, 12.5%) at $249/mt Aug. 15, down $1/mt on day.

Indonesian corn production has been affected by higher temperatures amid the El Nino phenomenon and supplies are expected to remain tight going into the fourth quarter of 2023 and first quarter of 2024, said a local corn trader. A second trader said, "It's not surprising that [feed millers] should buy more wheat as there is little harvest here." Current cash prices of Indonesian corn is at Rupiah 6,100 to 6,200/kg delivered warehouse Jakarta.

Berdikari had been active in consolidating imported feed wheat orders for feed millers in 2023, with the latest arrivals of two Russian feed wheat and one Bulgarian feed wheat cargos in July with the objective to meet the existing feed raw materials demand. Berdikari also had consolidations of Ukrainian and Australian feed wheat that did not go through in 2023. Feed millers in Indonesia could only import feed wheat through Berdikari.

Indonesia's current corn stock is estimated at 975,523 mt at the end of June 2023, according to Indonesia's Directorate General of Livestock and Animal Health. Corn production by industry sources are estimated between 10-11 million mt but is expected to have a downside of up to 30%, according to market sources.