China Delays or Redirects 600,000 Tons of Wheat Imports Amid Domestic Surplus

China has postponed the arrival of up to 600,000 metric tons of mostly Australian wheat and has offered some of these shipments to other buyers, as an abundant domestic supply reduces the country’s demand for imported grain, according to trade sources with direct knowledge of the matter.

China’s Reduced Demand Could Impact Global Wheat Prices

China, the world’s largest wheat importer, accounted for 6% of global wheat purchases in the year leading up to June 2024, according to the U.S. Department of Agriculture. With its significant influence on the market, China’s reduced intake could put further pressure on global wheat prices, which have remained below $6 per bushel after hitting a four-year low of $5.14 in July.

The country is well-stocked following strong corn and wheat harvests, leading authorities to delay new wheat shipments until at least April to prevent further declines in local prices, the sources said.

Postponed and Redirected Shipments

One of the sources, a Singapore-based trader working for an international company that supplies U.S. and Australian wheat to Asia, confirmed that Chinese buyers were trying to resell four shipments—three from Australia and one from Canada—totaling about 240,000 metric tons to buyers in Southeast Asia.

He also noted that approximately 10 vessels, each carrying about 60,000 tons of wheat, were being delayed or redirected.

“China has postponed the delivery time of several wheat shipments from Australia and Canada,” the trader said. “There is ample supply in the Chinese market, and local wheat prices have declined.”

An Australian grain trader confirmed that two shipments scheduled for delivery to China in February had been affected—one was delayed until April, while the other was partially redirected to Thailand.

China has reportedly delayed or redirected between eight and ten Australian shipments originally scheduled for January and February and has not booked any new shipments for March, the source added.

“China just doesn’t want anything showing up until April,” he said.

China’s Wheat Imports Decline While Domestic Stockpiles Grow

This is not the first time China has adjusted its wheat import strategy. Early last year, Chinese wheat importers canceled or postponed about 1 million metric tons of Australian wheat as growing global stockpiles put downward pressure on prices.

However, despite these adjustments, China imported 1.7 million tons of wheat from Australia in the first quarter of 2024, a decline from 2.5 million tons in the same period a year earlier. In contrast, Canadian wheat exports to China increased, with 923,000 tons shipped in the first quarter of 2024, up from 783,000 tons in the previous year, according to Chinese trade data accessed via Trade Data Monitor.

COFCO Absorbs Costs of Delayed Shipments

China’s state-run grain trader COFCO, which is responsible for most of these delayed or redirected cargoes, is covering the costs of postponing shipments, including storage fees, and will bear any financial gains or losses from reselling the wheat, according to the source in Australia.

COFCO has not yet responded to a request for comment.

China Prioritizes Domestic Farmers and Corn Stocks

China’s move to limit wheat imports is also driven by a desire to protect domestic farmers. Following a strong corn harvest, the country now has an abundant supply of corn for livestock feed, which has reduced the need for imported wheat used in both feed and flour production.

“After a good corn crop, they have more than enough corn for feed. So now, all of a sudden, the wheat they were importing for feed and flour has been wound back to just flour,” the Australian trader explained.

To further support its domestic agricultural sector, China’s state stockpiler Sinograin announced on Monday that it plans to expand stockpiling sites in northeast China to boost purchases of domestic corn harvested in 2024.

Outlook for the Global Wheat Market

With China reducing its wheat imports, Australian and Canadian wheat suppliers may need to look for alternative buyers in Southeast Asia and beyond. Meanwhile, if China’s demand remains weak in the coming months, global wheat prices could face additional downward pressure.

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