Asia's US grain pledge may redraw trade flows

SOUTHEAST Asian nations are set to reshape global grains and oilseed trade flows through United States trade deals that include raising agriculture purchases, with increased American shipments displacing Australian, Canadian and Russian supply.

While Indonesia and Bangla-desh have already agreed to increased buying as part of agreements that set lowered tariffs on their exports to the US, regional grains traders say Vietnam, the Philippines and Thailand may boost feed grain purchases under their deals.

“US farm exports are clearly set to gain ground in Asia,” said Ole Houe, director of advisory services at IKON Commodities in Sydney.

“On one hand, trade deals are creating pressure, but just as important are the lower prices of US wheat, corn and soyameal, which are cheaper than supplies from rival exporters.”

Asia, a net food importer, is a vital market for global suppliers, as the region’s consumption is rising with growing population and incomes. Asia accounts for about 30 per cent of world wheat, corn and soyameal imports, according to US Department of Agriculture data.

An influx of US crops could push down prices for rivals and drive up costs for them to ship grains at greater distances, said traders and analysts.

Over the past decade, suppliers from the Black Sea and South America have gained ground in Asia, eating into US market share.

The US share of Indonesian wheat shipments has fallen by almost 50 per cent in the past five years, replaced by imports from Ukraine, Russia and Argentina, according to data from the Indonesian Wheat Flour Producers Association. But Indonesian flour millers have bought about 250,000 tonnes of US wheat since July, according to two Singapore-based grain traders.

The association signed a memorandum of understanding then to buy one million tonnes of US wheat annually as part of trade negotiations to gain lower tariffs.

In 2024, the US sold 693,000 tonnes to Indonesia.

“Prices are key as these will be private deals by millers but getting one million tonnes of US wheat will not be a problem for us,” said an association official, declining to be named as they were not authorised to speak to media.

Australia supplies about a quarter of Indonesia’s wheat and could lose several hundred thousand tonnes in sales, said three Australian-based grains traders, though exporters further away might be impacted more.

It exported three million tonnes there in 2024, the country’s statistics bureau reported.

“If there are fewer sales of Australian wheat to Indonesia or Bangladesh that wheat is probably going to end up in places further away,” said Tobin Gorey, founder of commodities consultancy Cornucopia in Australia.

Bangladesh had approved imports of about 220,000 tonnes of US wheat, said a food ministry official in Dhaka on July 30.

Bangladesh committed on July 20 to import 700,000 tonnes of American wheat annually to strengthen trade ties, up from virtually no purchases in 2024.

Vietnam, one of the fastest-growing animal feed markets, is likely to import US wheat, corn and soyameal, said the Singapore-based traders.

In June, Vietnam’s agriculture ministry said firms would sign memoranda of understanding to buy US$2 billion of US farm produce, including five agreements to buy US$800 million of products from Iowa, including corn, wheat, dried distillers grains and soyabean meal.

It is not clear that the agreements were formally signed.

Argentina is currently Vietnam’s leading grains supplier, accounting for more than 50 per cent of its corn and 65 per cent of its soyameal imports over the past five years.

Thailand and the Philippines could also emerge as key importers of US corn, said Singapore-based traders.

One of the traders said purchases tied to trade deals could lead to Thailand buying more than one million tonnes of US feed corn, based on what would be needed to replace their current purchases of feed wheat from the Black Sea and feed corn from Asia.

Philippine corn purchases could be higher as its needed to replace 3.3 million tonnes of feed wheat, though its buying would depend on lowering its corn tariffs, said the trader.

“There have been productive trade discussions which present an opportunity for the US to strengthen its access to markets in our region,” said Timothy Loh, the US Soybean Export Council’s regional director for Southeast Asia & Oceania.

The writers are from Reuters

© New Straits Times Press (M) Bhd

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