US Deals Threaten Canadian Wheat Exports to Key Markets

Two of Canada’s largest wheat buyers, Indonesia and Bangladesh, have signed agreements with the United States to significantly increase their purchases of American wheat, raising concerns among Canadian growers and exporters. According to Cereals Canada, Indonesia is Canada’s top wheat market, importing 2.1 million tonnes in the first 11 months of the 2024-25 campaign, while Bangladesh ranks seventh with 1.07 million tonnes.

In July, the U.S. and Indonesia finalized a trade deal eliminating Indonesian tariffs on 99% of American products. Additionally, Indonesia’s flour milling association (APTINDO) signed a memorandum of understanding (MOU) with U.S. Wheat Associates, committing to double its annual U.S. wheat purchases to one million tonnes per year for the next five years. A similar MOU with the Government of Bangladesh pledges to buy 700,000 tonnes of U.S. wheat annually over the same period. Leif Carlson, director of market intelligence at Cereals Canada, called these MOUs a “big concern” for Canadian exporters.

The explicit mention of wheat in the MOUs is particularly troubling, as it could limit Canada’s market opportunities. However, Carlson noted that the impact on Canadian exports will depend on the types of wheat Indonesia and Bangladesh purchase from the U.S. For instance, Indonesia currently imports mostly soft wheat from the U.S., which does not compete directly with Canada’s hard red spring wheat (HRSW). This raises hopes that Indonesia could meet its U.S. commitments without reducing Canadian wheat imports.

In Bangladesh, the situation is more challenging, as the U.S. previously held a minimal market share but now aims to expand significantly, including through HRSW imports. Since July, Indonesian millers have purchased 250,000 tonnes of U.S. wheat, while Bangladesh has approved 220,000 tonnes. Cereals Canada will closely monitor changes in Canadian import volumes in these markets, hoping that prior efforts to strengthen Canada’s market share in the region will mitigate potential losses.

Further concerns arise from U.S. negotiations with Vietnam, the Philippines, and Thailand, all significant buyers of Canadian wheat. While details of these agreements are not yet public, Carlson suggests they may involve purchasing a set value of U.S. agricultural products rather than specific commodities. Canadian exporters hope that Cereals Canada’s strategy of reinforcing its position in the Indo-Pacific region will help maintain the competitiveness of Canadian wheat in these markets.

Tags: Philippines, Indonesia, Canada, wheat, Thailand, USA, Bangladesh