Asian local currency exchange rates affect wheat import demand

Due wheat demand for wheat imports was also affected by weak local currency exchange rates in importing countries.

Industry officials said that the weak local currency exchange rate of some major Asian wheat importing countries has affected the demand for wheat imports, and the import volume in 2015 may be 5 to 8% lower than the previous year.

According to Vijay Iyengar, executive director of Agrocrop International, an agricultural trader based in Singapore, Asian flour processors are only on demand, and some are reducing their imports because the exchange rate of their currencies against the US dollar has fallen. He said demand for wheat would be reduced by 5 to 8 per cent this year. Weak emerging market currencies are adversely affecting flour processors, as is the case in much of Asia.

So far this year, the rupiah has fallen 19 per cent against the dollar, the Malaysian ringgit is down 28 per cent and the Thai baht is down 11 per cent. Indonesia is the world's second largest wheat importer. According to USDA data, wheat imports in Asia in 2014/15 were 42.74 million tons, up 6% from 2011/12.

Although wheat prices fell to a four-week low this week on the expectation of favorable rainfall in the United States and Russia, the weakness of the local currency of Asian countries has made the cost of US dollar-priced wheat imports more expensive.

Iangal said that the harvest in the northern hemisphere is nearing completion, so agricultural prices may have bottomed out, but prices are unlikely to soar because global supplies are abundant. He said the harvest of most of the northern hemisphere's crops had been set. People are talking about El Nino, but the weather in Australia and India has not been completely affected. We have not seen a significant increase in prices.

Source: First Agricultural Economic Network | Release Date: October 26, 2015 | Responsible Editor: Zhai Tianchang