China has imposed anti-dumping duties on Australian wine and barley and slashed purchases of Australian coal and beef, but is seeking out wheat as prices hover near eight-year highs
China is importing Australian wheat despite a trade standoff between the two countries amid a global shortfall in output.
The buying spree comes as Australia, a key global food supplier, is expecting a second consecutive bumper harvest, while producers in the Northern Hemisphere have been hit by adverse weather and drought.
China, the world’s top importer of agricultural products, has imposed anti-dumping duties on Australian wine and barley and slashed purchases of Australian coal and beef during the long-running dispute, but is seeking out wheat as prices hover near eight-year highs.
It is all about availability of good quality wheat supplies at the right price when it comes to food security for China, or any other country, said Phin Ziebell, an agribusiness economist at National Australia Bank in Melbourne. Of course, there is posturing over the trade dispute, but food supplies are key.
China has emerged as a leading buyer of Australia’s upcoming wheat crop, taking close to two million tonnes out of the five million or so that farmers have sold so far from the 2021/22 (July-June) crop, which will be harvested at the year-end, three trade sources and one analyst told Reuters.
Chinese buyers have cancelled some cargoes of French wheat on quality issues, and they are turning to Australia in a big way, said one Singapore-based trader at an international food-supply company.
We are indeed expecting a bumper Australian wheat harvest and China will definitely import as Aussie wheat seems like the only better choice globally, said a Beijing-based trader with an international trading house, adding that French wheat this year is basically doomed due to quality issues.
Australian forecasters last week upgraded wheat production targets to 32.6 million tonnes for the season ending June 30, 2022, which would make it second only to last season’s record-breaking harvest of wheat in the country.
The bumper supply outlook represents a remarkable turnaround from three years of drought in Australia that subsided only early last year.
Global wheat prices jumped to their highest since 2013 in August on expectations of lower output among top exporters due to adverse weather in Russia and drought in the US and Canada.
Benchmark Chicago Board of Trade (CBOT) wheat futures Wv1 were trading at $7.17-3/4 a bushel on Friday, near an eight-year high of $7.75 a bushel reached in August.