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China buys wheat over crop damage risk

China buys wheat over crop damage risk

Express Tribune11-05-2025

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Chinese buyers bought between 400,000 and 500,000 metric tons of wheat from Australia and Canada in recent weeks, traders said, as heat threatens to damage crops in China's agricultural heartlands.
China is the world's top wheat grower and also imports large amounts of grain when domestic supply falls short of demand.
Earlier this week, Henan province, which grows about a third of China's crop, issued a risk warning as hot, dry weather threatened the wheat growing in its fields. Chinese buyers have purchased four or five 55,000-ton shipments of wheat from Australia for delivery in July or August and around 200,000 tons from Canada, sources at two major trading firms in Australia said. The wheat is of milling quality.
The bookings from Australia were the first made by China from the country since last year, said one of the traders. Cofco, the state-owned Chinese firm that handles most of the country's wheat imports, did not immediately respond to a request for comment. China has in recent years been one of the world's biggest wheat importers, buying in around 11 million tons worth $3.5 billion in 2024. Australia and Canada are typically its biggest suppliers.
But shipments slowed sharply after China reaped large wheat and corn harvests last year and have since remained low. China delayed or redirected shipments from Australia earlier this year and imported less than a million tons of wheat in the seven months to March 31, Chinese customs data accessed through Trade Data Monitor show.
One of the sources said their company had lowered its forecast of Chinese 2025 wheat production by around 5 million tons but there was no guarantee that more purchases would follow because China has large wheat inventories. "China is well self-sufficient in feed grains this crop year with heavy stocks," said Rod Baker, an analyst at Australian Crop Forecasters in Perth, adding that faltering economic growth in China was also depressing demand for grains.
Talk of Canadian wheat sales to China has echoed around agricultural business circles in Winnipeg, Canada's grain industry capital, according to traders. Few concrete details on the sales have emerged. Chinese buyers would have avoided buying US wheat due to tariffs and the trade war between Washington and Beijing, one trader said. China in the past has been a top destination for US wheat sales.
The drop-off in Chinese imports earlier in the current 2024/25 season had contributed to subdued international wheat prices, with benchmark futures in Chicago still near a four-year low touched last July. Along with weather risks to China's upcoming harvest, attractive prices may have lured Chinese importers back into the market as the 2025-26 season approaches, traders said.
Chinese importers also booked a large amount of barley, according to traders. Some said that six panamax bulk carriers carrying around 360,000 tons of French or Ukrainian new-crop barley had been sold for delivery in July or August, with others putting the volume much higher at around 1 million tons, also for shipment this summer.
Deflation deepens
Meanwhile, China's factory-gate prices posted the steepest drop in six months in April while consumer prices fell for a third month, underlining the need for more stimulus as policymakers grapple with the economic toll from a trade war with the United States.
A prolonged housing market downturn, high household debt and job insecurity have hampered investment and consumer spending, keeping deflationary pressures alive. Now, the economy is also facing increasing external risks from trade barriers. However, there are hopes for a de-escalation of tensions as US-China trade talks begin in Switzerland on Saturday.
The Producer Price Index (PPI) dropped 2.7% in April year-on-year, worse than a 2.5% decline in March but was less than economists' forecast for a 2.8% fall, National Bureau of Statistics data showed on Saturday. "China still faces persistent deflationary pressure," said Zhiwei Zhang, Chief Economist at Pinpoint Asset Management. "The pressure may rise in coming months as exports will likely weaken."
"Even if China and the US can make progress and cut tariffs in trade negotiations, tariffs are unlikely to go back to the level before April," Zhang added. "More proactive fiscal policy is necessary to boost domestic demand and address the deflation problem."

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