Wheat exports survive China pull-back
SASKATOON — The world’s largest wheat importer has curtailed purchases big time in 2024-25.
The U.S. Department of Agriculture expects China to import 3.5 million tonnes of the crop this marketing year, down from 13.64 million tonnes last year.
That means China won’t even crack the top 10 after leading the entire world in purchases in 2023-24.
It is the main reason the USDA expects world wheat trade to contract by 11.8 per cent in 2024-25, the sharpest decline in decades.
China was the top buyer of Canadian wheat in 2023-24, but sales to that key market have plummeted this year.
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China purchased 570,500 tonnes of Canadian wheat during the first seven months of the 2024-25 campaign, down from 2.02 million tonnes for the same period a year ago, according to Canadian Grain Commission statistics.
MarketsFarm analyst Bruce Burnett noted that China is the world’s largest wheat producer.
“Obviously, last year their domestic crop was harvested in pretty good shape, I would infer, just from their behaviour,” he said.
China could also be trimming its domestic reserves, which the USDA estimates was 134.5 million tonnes at the beginning of 2024-25.
Burnett said it would be concerning if Canada was losing market share in China to competitors such as Russia and Kazakhstan, but that is not the case. China is cutting purchases from everyone.
And while sales to China may be down substantially, sales to other countries are up.
“We’re running close to last year’s record export pace, so we’ve obviously done a good job of replacing the lost tonnage,” he said.
Sales to markets such as the United States, Peru and Mexico are up.
Canada used to rely on certain primary markets, but that has changed.
“Now I would say it’s much more amorphous and flexible in terms of where our exports go,” said Burnett.
Canada shipped wheat to 62 countries through the first seven months of 2024-25, according to the CGC.
Burnett said it is hard to say how much wheat China will buy in 2025-26. A lot will depend on what it decides to do about its reserves.
“Generally, I would say that the Chinese government waits for opportune buying times to import for reserve replenishment,” he said.
The other big factor will be the weather. Much of China’s high quality spring wheat is grown in the northern region of the country.
“That area is in drought right now, so that may be a concern that would point to maybe (China) buying a little bit more next year,” said Burnett.
China’s 2024-25 imports would be well below its tariff rate quota (TRQ) of 9.636 million tonnes if the USDA’s estimate proves accurate.
The country had been exceeding its TRQ since 2020.
The United States launched a World Trade Organization dispute in 2016 challenging China’s administration of TRQs for wheat, corn and rice.
A WTO panel ruled in 2019 that China’s administration of the TRQ was WTO-inconsistent.
As part of its Phase One Agreement with the U.S., China agreed that its administration of the program would conform to its WTO obligations starting Dec. 31, 2019.
But according to a recent report by the U.S. Trade Representative, that has not happened.
“Due to China’s poorly defined criteria for applicants, unclear procedures for distributing TRQ allocations, and failure to announce quota allocation and reallocation results, traders are unsure of available import opportunities, and producers worldwide face reduced market access opportunities,” stated the report.
Source: producer.com