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China’s wheat import landscape shifts as Australia faces challenges

14 December 20233 min reading

China’s wheat imports for the 2023/24 season are forecasted to reach 12.5 million tons, primarily driven by substantial recent purchases from the United States. Australia, which dominated China’s wheat imports last year, is facing challenges due to a smaller crop. As a result, China has turned to alternative sources, including the United States, Canada, Kazakhstan, and Russia.

Despite being slightly below the previous year’s figures, China has once again secured its position as the world’s leading wheat importer for the second consecutive year, the December edition of the USDA’s ‘Grain: World Markets and Trade’ report said. The report notes that on a calendar year basis, China has already imported 10.7 million tons through October, signaling a significant surpassing of the 9.36-million-ton tariff rate quota (TRQ). This marks a historic milestone, as it is the first calendar year since 1995 that China is expected to import over 10 million tons of wheat.

The report emphasizes a noteworthy shift in the dynamics of the global wheat market, highlighting the resurgence of the United States as a major supplier to China. Despite facing a decline in market share over the past decade due to price competitiveness and tough competition from Australia, Canada, and the European Union (EU), the United States has made a substantial comeback. Total U.S. wheat commitments to China since June have exceeded 2 million tons, with a particular boost from strong sales of Soft Red Winter (SRW) wheat. Abundant supplies of SRW, resulting in lowered prices, have made it competitive against Australian and French wheat.

China’s heightened demand for international wheat is attributed to concerns about the quality of its domestic crop, primarily due to adverse weather conditions during the harvest in the top wheat-producing province of Henan. Heavy rains have impacted the quality of the domestic crop, leading to an increased need for milling wheat imports to supplement lower-quality feed wheat used by Chinese feed mills. In response to the quality concerns, China is diversifying its sources and increasing wheat imports from various origins.

Australia, which dominated China’s wheat imports last year, is facing challenges due to a smaller 2023/24 crop. Given a record 2022/23 crop and lower shipping costs to China, Australia exported a record 7.8 million tons of wheat to China in the last trade year, capturing nearly 60 percent market share. So far this trade year (Jul-Oct), China wheat imports from Australia are down 27 percent from the same period last year. Australia’s smaller 2023/24 crop, which was harvested beginning in October, has severely curtailed exportable supplies for the coming year.

As a result, China has turned to alternative sources, including the United States, Canada, Kazakhstan, and Russia. Import data indicates a 37% increase in wheat imports from Canada, a significant volume from Kazakhstan, and nearly record-high imports from Russia, which has become a major player since China lifted restrictions on Russian wheat imports.

Russia, in particular, stands out as a formidable competitor due to its price-competitive milling wheat compared to U.S. or Canadian origins. A noteworthy agreement signed in October between Russian exporter EPT and China for the export of 70 million tons of grains, oilseeds, and legumes over 12 years is expected to further strengthen trade ties between the two nations.

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