China 2024 grain imports seen near record high despite cancellations

Naveen Thurkal and Mei Mei Cgu from Reuters (2024) wrote in March that China's wheat imports from Australia for the two first months of the year, January and February, has nearly quadrupled since the same time last year. The trend should continue even though Beijing canceled or postponed 1 million tons of Australian wheat. China is the largest farm good buyer, and they will remain near record highs despite a recent wave of cancellations as lower global prices and domestic output leads to a lack of purchases. 

The cancellations, coupled with those affecting approximately 500,000 tons of U.S. wheat, sparked worries about diminishing Chinese demand. Given its significant influence in global agriculture markets, this downturn could potentially trigger a decrease in prices.

However, traders and analysts argue that the cancellations are unlikely to affect overall demand significantly. They suggest that lower wheat prices will stimulate buying activity, especially with additional government funds earmarked to bolster grain and oil seed stockpiles.

Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney said; "China's imports of wheat and barley from Australia are running at break-neck speed. And they are buying large volumes of soybeans, corn and wheat from other origins as well, such as the United States, France and Ukraine. The reality is that grain imports are going to be similar to last year's record pace”. 

In recent years, China has emerged as the leading purchaser of wheat, especially favoring higher quality grain sourced mainly from Australia, Canada, and the U.S. Additionally, China ranked as the second-largest importer of corn last year, primarily for animal feed purposes, spurred by elevated local prices.

Traders have noted that the volume and caliber of the June harvest will dictate China's wheat imports, although it's anticipated that Beijing will persist in procuring higher quality grains for bread and pasta production. The quality of crops suffered due to adverse weather conditions preceding last year's harvest, leading to record imports, with some of the impaired wheat speculated to substitute corn in animal feed.

Meanwhile, China's corn imports have been increasing as feed manufacturers capitalize on lower international prices. The country imported 6.19 million tons of corn in the first two months of this year, marking a 16% rise from the previous year. According to an analyst based in Shanghai, full-year imports are expected to remain steady.