U.S. wheat sales to Indonesia about to rise significantly

SASKATOON — The United States will be increasing its market share in one of Canada’s top wheat markets.

The U.S. has finalized a reciprocal trade agreement with Indonesia.

Indonesia has committed to buying at least two million tonnes of U.S. wheat per year for the next five years and a minimum of 1.3 million tonnes per year after that.

However, the agreement includes a clause saying Indonesia will not be deemed to be in breach of its commitments if it fails to meet the specified volumes as long as no trade barrier was imposed.

WHY IT MATTERS: Indonesia is Canada’s second biggest wheat customer.

The targeted volumes in the agreement represent a significant increase over current trade levels.

The U.S. has sold 998,000 tonnes of wheat to Indonesia so far in the 2025-26 marketing year, which runs from June 1, 2025, through May 31, 2026.

The previous five-year average of exports to that market is 539,000 tonnes.

“That would mean that the U.S. will have a larger market share going forward than they have had in the past,” said Leif Carlson, vice-president of markets and trade with Cereals Canada.

However, that won’t necessarily impact Canada’s trade with Indonesia. The big question is — what classes of wheat will the U.S. be shipping to that market?

Half of what the U.S. exported to Indonesia in 2025 was white wheat and another 33 per cent was hard red winter wheat. Only 15 per cent was hard red spring wheat, which competes head to head with Canadian milling wheat.

Wheat used for milling will enter the country tariff-free, just like it has in the past.

The other thing to note is that Indonesia is an expanding market fueled by population growth, a thriving economy, increased urbanization and an expanding middle class.

In other words, there will be a bigger pie to slice going forward.

Indonesia was Canada’s second largest wheat customer behind China in the 2020-2024 period, accounting for 11 per cent of the 19 million tonnes per year in average non-durum wheat exports during that five-year stretch.

Canada has shipped an average of 2.4 million tonnes of wheat to that market annually during the past three years.

“Canada has a longstanding relationship with the Indonesian milling sector,” said Carlson.

“It’s a very sophisticated milling sector that knows the wheat that they need to make the products that they’re selling.”

As well, Canadian wheat has a prominent role in that mix, so the increase in U.S. business will not necessarily come at the expense of Canadian exports.

A similar situation happened in July 2025 when Bangladesh signed a memorandum of understanding to purchase 700,000 tonnes of U.S. wheat per year over the next five years.

Bangladesh is another major buyer of Canadian wheat, so the U.S. deal was a potential threat.

However, it turns out that the U.S. wheat is being used for food aid while Canadian wheat is for milling purposes, so there is no direct competition.

Carlson said Canada needs to continue prioritizing engagement with its key customers and to sign trade deals of its own.

The Canada-Indonesia Comprehensive Economic Partnership Agreement is awaiting ratification.

Source: producer.com