Chinese buyers have recently purchased between 400,000 and 500,000 metric tons of wheat from Australia and Canada as extreme weather threatens domestic crops, according to traders. The deals include four or five shipments of 55,000 tons each from Australia for delivery in July or August, along with around 200,000 tons from Canada. This marks China’s first major Australian wheat purchase since last year. The move comes after Henan province, which produces about a third of China’s wheat, issued a crop risk warning due to hot, dry conditions damaging yields.
Despite being the world’s largest wheat producer, China imports grain when domestic supplies fall short. However, shipments had slowed after strong harvests in 2023, with imports dropping below 1 million tons in the first seven months of 2024. Analysts note that China maintains large wheat stockpiles, which could limit additional purchases. Traders also reported significant barley imports, with up to 1 million tons of French or Ukrainian barley booked for summer delivery.
Meanwhile, China avoided U.S. wheat due to ongoing trade tensions and tariffs. The country has historically been a major buyer of American wheat but has shifted to alternative suppliers in recent years. The recent purchases come as global wheat prices remain near four-year lows, making imports more attractive.
On the economic front, China’s producer prices fell 2.7% in April year-on-year, the sharpest decline in six months, while consumer prices dropped for a third consecutive month, signaling persistent deflationary pressures. Weak domestic demand, a struggling property market, and trade disputes with the U.S. continue to weigh on growth. However, upcoming trade talks between Washington and Beijing may offer some relief if tariffs are reduced.
The combination of crop risks and low global prices has prompted China to re-enter the wheat market, though its large reserves may prevent a sustained surge in imports. Meanwhile, economic challenges and deflationary trends underscore the need for stronger fiscal stimulus to revive demand.
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