Colombian Peso Depreciation Limits Wheat Milling Demand
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In MY 2023/24, Colombian Wheat production is forecast to remain unchanged at 6,000 MT with an estimated harvested area of 2,500 ha. Colombia primarily produces soft Wheat, grown in two high-altitude regions, Nariño and Boyaca, with more favorable climatic conditions for Wheat cultivation. Domestic Wheat production is set and primarily destined for wet milling and preparation of traditional Colombian dishes.
Wheat consumption is forecast to only slightly increase to 2.2 million MT of Wheat grain equivalent (WGE) following Colombia’s economic growth, projected to slow down to 1.2 percent in 2023 and 1.7 percent in 2024. In MY 2022/23, Wheat consumption is estimated to be down 1.4 percent from USDA’s official figure of 2.1 million MT WGE, driven by lower consumption from the animal feed industry.
Feed Wheat consumption decreased by 4.2 percent from USDA’s official estimate as the price-sensitive animal feed industry preferred corn and soybean meal to supply their needs. Corn is the primary feed grain in Colombia. Per capita, Wheat consumption is estimated at 65 pounds. Forty Wheat milling facilities in the country produce nearly 1.4 million MT of Wheat flour.
The bread industry consumes approximately 70 percent of Wheat, followed by the pasta and cookies, and pastry industries. Wheat feed consumption usually represents less than 10 percent of total consumption, as the animal feed industry only imports more significant amounts of Wheat when Wheat prices are competitive enough for feed formulation.
Wheat Trade in Colombia
In MY 2023/24, Wheat imports are forecast at 2.2 million MT, a 2.4 percent increase from Post’s revised figure for the previous year, as local consumption is projected to increase following Colombia’s economic growth marginally. In MY 2022/23, Wheat imports are revised by 8.7 percent to 2.1 million MT. High international prices of Wheat and the strong U.S. dollar against the Colombian peso have limited demand from the Wheat milling industry. The Colombian Wheat milling industry is entirely supplied through imports.
According to AgFlow data, Canada led Colombia’s Wheat import market with 40,000 tons in May 2023, followed by France (33,000 tons) and the US (32,761 tons). There are approximately 60 importers of Wheat in Colombia. Given Colombia’s strong milling industry, 99 percent of Colombian Wheat imports are Wheat grains for further processing. The remaining 1 percent is pasta and other Wheat products.
In MY 2021/22, U.S. Wheat market share in Colombia started to recover due to U.S. industry campaigns and more robust trade relations with Colombian millers. Nonetheless, Canada continues to be the primary supplier. From July 2022 to January 2023, the U.S. Wheat market share decreased to nearly 27 percent as Colombian importers shifted to Canadian (62 percent) and Argentinian Wheat (7 percent) due to more competitive prices.
In addition, U.S. grain shipments faced challenges moving through the Mississippi River due to low water levels caused by dry weather conditions in the second half of 2022. In MY 2023/24, Wheat exports are forecast to increase to 25,000 MT, driven by rising sales to Venezuela, which has experienced modest economic gains in the past year. Venezuela is the leading destination for Colombian Wheat products. In MY 2022/23, Wheat exports are estimated to decrease from USDA’s official estimate to 20,000 MT based on available trade data.
Lower imports at higher prices affected the competitiveness of Colombia’s Wheat exports. Colombia mainly exports Wheat flour, representing 74 percent of total Wheat exports. In MY 2021/22, the leading destination for Colombian Wheat flour was Venezuela (80 percent), followed by Curacao and Ecuador. Colombian pasta exports were shipped to Venezuela (47 percent) and the United States (35 percent) in MY 2021/22.
Other sources: USDA
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