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Wednesday January 25, 2012

Indonesia's 2012 wheat flour consumption seen up 5%-6%


Listed firms that could gain from any rise in Indonesian wheat consumption include Indofood Sukses Makmur, Singapore's Wilmar International and Malaysia's PPB Group.

JAKARTA, Jan 24 (Reuters) - Wheat flour consumption in Indonesia will increase by as much as 6 percent to 5 million tonnes this year, as demand from an emerging middle class grows for wheat products such as bread, an industry association said on Tuesday.

"We are optimistic that domestic wheat flour consumption will grow at least 5 to 6 percent in 2012, or at least equal to GDP growth," Franciscus Welirang, the chairman of the Indonesia Wheat Flour Producers Association (Aptindo), told reporters.

"Indonesia's bread industry is experiencing the highest wheat flour consumption growth," Welirang added.

He said Indonesia's 2011 wheat imports were 5.2 million tonnes, in line with an estimate he made in June last year.

"Projected improvements in economic conditions in 2012, declining global wheat prices, an increasing Indonesian population and the development of domestic wheat flour industries are among factors driving domestic wheat flour consumption," Welirang said.

Indonesia, Asia's top wheat importer, relies entirely on imports for its wheat and gets around 70 percent of supplies from Australia, with Canada and the United States accounting for a large portion of the remainder.

But Australia, expected to see a record wheat crop and exports in 2011/12, has had a deluge of rain in some areas that will reduce the quality of the crop.

Welirang said he was unconcerned by the wet weather as Indonesia largely imported from Australia's west coast.

"The wheat flour market is expected to improve in 2012 because international wheat flour prices will be more stable than in 2011," Welirang said. "Weather conditions are expected to be better and wheat harvests are also expected to improve.

"Over the next 12 months there is no indication that global wheat prices will increase dramatically, unless due to price speculators."

A sign of Indonesia's growing demand for wheat flour is seen in the increasing number of flour millers, which according to Aptindo now number 22, up from 18 last year.

Listed firms that could gain from any rise in Indonesian wheat consumption include Indofood Sukses Makmur, Singapore's Wilmar International and Malaysia's PPB Group.

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