China-Australia relations: wheat shipments to grain-hungry China surge as total 2020 exports just shy of record high

Despite warnings that Chinese authorities might block Australian wheat amid an escalating political row, wheat exports to China surged last month, underscoring a year in which overall trade between the countries approached a record high.

After three months in which there had been no wheat trade between the two countries, hundreds of thousands of tonnes changed hands in December, valued at A$248 million (US$191.2 million), according to preliminary trade data from the Australian Bureau of Statistics (ABS).

The exchange came in sharp contrast to the tensions that rocked the China-Australia relationship for most of 2020.

Final export figures will be confirmed early next month, but based on the preliminary international data released on Monday, Australia’s total goods exported to China reached A$145.2 billion for 2020. That would be just 2.16 per cent less than 2019’s A$148.4 billion total, which was the highest recorded in ABS data since 1988.

Amid blistering demand from grain-short Chinese importers, in part due to supply shortages in competing Black Sea markets, Australia shipped 600,000 tonnes of wheat to China last month and a further 110,000 tonnes this month, according to commodities analyst S&P Global Platts.

The bumper sale to China in December accounted for a third of all wheat exported from Australia, and was its largest-ever monthly wheat export to any single country, the ABS said.

Vietnam and Indonesia each received shipments of 265,000 tonnes of Australian wheat last month, S&P Global Platts said.

Australia’s 600,000-tonne shipment was well ahead of its last record single shipment of wheat at 400,000 tonnes in early 2014, according to S&P Global Platts agricultural pricing editor Takmila Shahid.

“Given decreasing competition from export restrictions in Russia, Australia is well-placed to supply wheat not only to eastern Asia but also markets in the Middle East and Africa, regions where Black Sea and European uppliers traditionally dominate,” Shahid said.

The 600,000-tonne shipment was booked in September, and its successful export in December was a good sign that Australian wheat orders were not being turned away, unlike other commodities such as coal had been.

China Macro Economy

Tags: China, Communist Party