Demand growth to lift Philippines wheat imports to record high in 2018-19

21.03.2018

Wheat imports by the Philippines will resume growth next season, hitting their highest on record, offering an early fillip to exporters from the US, the country’s top origin for purchases.

The US Department of Agriculture bureau in Manila, in their first forecasts for Philippines grain supply and demand in 2018-19, pegged wheat imports at 5.75m tonnes.

That would be the highest on data going back to 1960, and represent a return to expansion after an easing this season to an estimated 5.20m tonnes “as stocks are being drawn down”.
 
Indeed, the bureau’s 2017-18 figure is 500,000 tonnes below the USDA’s official estimate.

‘Bright spots’

The prospect of enhanced demand next season reflects “increasing consumption” prospects, for both food and feed uses.

The bureau said that tax reforms, which in January saw cuts to the likes of income and estate taxes in favour of increased levies on fuel, electricity and sugary drinks, “should increase disposable incomes and raise food and feed consumption in 2018-19 onwards”.

Meanwhile, feed demand should be boosted by the needs of “domestic livestock and poultry industries [which] continue to be the bright spots of Philippine agriculture primarily due to the performance of the hog and chicken industries”.

“Next to rice, hog and chicken production are the top contributors to Philippine farm output with shares of 14.8% and 12.0%, respectively.”

Wheat’s use in feed is enhanced thanks to “a lower price relative to feed corn”.

Key suppliers

The prospect of growth in Filipino wheat imports next season will be of reassurance to wheat exporters in the US, Australia and Canada particular, historically, the top three origins on this route.

Indeed, the US – exporting 2.49m tonnes of wheat to the Philippines in calendar 2017, worth $565m - had a market share of 53%.

The Philippines, in turn, was the third-biggest buyer of US wheat.

“US market share during [2018-19] will likely remain flat due to increased competition from Black Sea and Latin American wheat sources,” the bureau said.

The report represents among the earliest of a series set to be issued by USDA bureau ahead of the department’s May Wasde briefing, which will unveil the first global grain balance sheet forecasts for 2018-19.


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