In anticipation of a wheat drought around the world, China has bought bulk wheat from Oceania, Europe and North America.
This has happened after rain damaged around 25 million tonnes or 20% of the Far-east country’s yearly wheat production.
An earlier report had painted a bleak picture on the Chinese wheat fields when heavy rainfall decimated its 2023 crop.
While Australia’s wheat glut has attracted the most of bulk booking, the waiting list also includes Canada, the U.S. and France.
The case of the United States is rare as China has not imported the grain from the U.S., since 2021.
Here is a peek at the tonnage per country that China has already scooped up as it builds its 2024 reserves:
- 2.5 million tonnes from France
- 2 million tonnes from Australia
Price Pressure Fuels Frantic Buying by China
The frantic purchases of wheat by China underscores the fact that the grain has had a few comebacks in 2023. For instance, there was a 2% increase in July to $5.91 a bushel (($0.22 per kg) after war stuck Ukraine’s exports. Prices then fell by 5%, only to recover by October 5 on the news that Australia and South America faced drought.
The early October price of $5.63 per bushel ($0.21 a kg), an increase of 0.5%, was, however, short-lived. With the peak of the American fall harvest, new pressure on prices came up.
The price has now lost 50% since the 2022 high of $13 a bushel, per the Chicago grain futures’ benchmark.
The most recent statistics show that the Chicago December wheat contracts fell to $5.561/4 a bushel ($0.20 a kg) . This was on October 31, at the climax of the Kansas wheat harvest,
In a word, world wheat prices are at a 36-month record low.
Thus, China is likely forward-buying to evade the future price trap once drought hits world-producing regions.
When are Shipments coming to China?
China’s forward buying of wheat will likely reach the country as follows:
- The Australian shipments will start trickling into the country by December, 2023.
- Shipments inbound from France, which China booked in September, will reach home by March, 2024.
Trade analysts also cite that overall purchases of wheat by China will hit 12 million tons by 2024. This will be 2.4 million tons more than the imports of 2022.