China may become world’s biggest wheat buyer

China will displace Egypt as the world’s top wheat importer in 2022-23, according to the U.S. Department of Agriculture.

The country is forecast to purchase 12 million tonnes of the commodity, the highest level since the 12.5 million tonnes imported in 1995-96.

It is a stunning turnaround for a country that a short time ago was being criticized for its lacklustre wheat imports.

China lost a World Trade Organization dispute in 2019 for failing to administer its tariff rate quota (TRQ) in a “transparent, predictable or fair” manner.

The United States launched the dispute because China wasn’t coming close to fulfilling its 9.64 million tonne TRQ.

Flash forward four years and the country is now poised to exceed the TRQ by a wide margin.

China’s purchases started ramping up in 2020-21 and are now forecast to be three times the level they were five years ago.

Neil Townsend, market analyst with GrainFox, believes China is bargain shopping.

“They’re opportunistically buying some cheaper wheat and using it as feed,” he said.

It has purchased 4.7 to 4.9 million tonnes of new crop wheat from Australia, some of which was downgraded by late-season rains.

Townsend also wonders about the condition of China’s domestic wheat crop. Around this time last year, China’s minister of agriculture said winter wheat conditions were “the worst in history.”

He wonders if there may be a repeat scenario occurring this year.

Not according to the USDA, which is forecasting a record Chinese crop of 138 million tonnes.

Townsend is skeptical of that number. He also doubts the country will have 140 million tonnes of stocks by the end of 2022-23, or 53 percent of global supplies of the commodity.

“Why would they be the world’s biggest wheat importer?” he said.

“It just doesn’t make any sense.”

Egypt had been the world’s leading wheat importer for many years before China’s ascension.

It is still forecast to be a big player, ranking second with an estimated 11 million tonnes of purchases in 2022-23.

The European Union and Turkey are expected to tie for third spot with 10.5 million tonnes each.

Australia has been the main supplier of wheat to China, followed by Canada and then France.

China has been Canada’s top wheat market through the first seven months of the 2022-23 campaign.

It has purchased 2.15 million tonnes of the crop, according to the Canadian Grain Commission. That is four times the amount for the same period a year ago.

Chinese wheat prices have hovered around US$450 per tonne over the past year, while international prices have trended lower over the past few months, falling below $400 per tonne due to ample supplies in Australia, the European Union and Canada.

“Australian wheat is especially competitive following three consecutive years of record crops,” The USDA said in its Grain: World Markets and Trade report.

Some Chinese feed mills have substituted wheat for corn in rations because Chinese corn prices have averaged above $400 per tonne.

Feed represents one-quarter of China’s total feed consumption.

Tags: Egypt, wheat, purchase, импортер, tariff rate quota, Australia, China