Asia’s pledge to boost US farm imports may redraw trade flows

Reuters :

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

While Indonesia and Bangladesh 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 soymeal, 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 percent of world wheat, corn and soymeal 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, traders and analysts said.
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 percent 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.