RI imports more Australian wheat

RI imports more Australian wheat

SYDNEY (Reuters): A new deal for Australian wheat with Indonesia, even though the country remains one of Asia's hardest- hit economies, brightened an otherwise threatened and dreary Australian grains market last week.

The Australian Wheat Board's (AWB) announcement that Australian wheat would be used to commission a new Indonesian flour mill in Semarang, northeast of Jakarta, marked the beginning of a likely continuing new market.

It came as Indonesia's position as one of Australia's main wheat markets remained firm, despite the financial turmoil which has rocked the country and as its wheat import system is shaken by major changes required by the IMF.

A spokesman for the AWB told Reuters on Friday that the Indonesian market continued to tick along as normal despite the country's financial problems. It was performing in line with expectations, with Indonesian import prices in line with softer world wheat prices generally.

Against this background, commissioning of PT Sriboga Raturaya Flour Mill's Semarang mill with Australian wheat made the mill the AWB's third customer in Indonesia.

Until 14 months ago, PT Bogasari Flour Mills, Indonesia's biggest flour milling firm and a member of the giant Salim group, was the AWB's sole customer in the country through its monopoly on flour milling.

PT Citra Flour Mill at Cilacap became the AWB's second customer in Indonesia a year ago. Since then it has purchased about 280,000 tonnes of Australian wheat.

Now the list is joined by the new Semarang mill, with a capacity of 450,000 tons a year against Bogasari's total capacity of four million tonnes.

Tim Dewan, AWB's Southeast Asian regional marketing manager, said Friday that increased power for the Indonesian mills was good for Australian trade.

"We've had very good relationships with the mills over the years. To me it's a straight out positive," he said.

As a result of changes which involve the winding down of the former state import monopoly Bulog, PT Bogasari, with its 25 years of operation, is expected to become more profitable and to increase its market power.

Indonesia, Australian wheat's second-largest market, imported just under 2.5 million tons of wheat worth A$500 million to A$600 million last year, giving Australia a 60 percent share of its market.