China, the world’s biggest consumer of wheat, bought almost 1 million metric tons from the U.S. after prices slumped 30 percent from a four-year high reached in July, state-owned researcher grain.gov.cn said. Wheat jumped as much as 1.4 percent.
The country this month ordered 14 to 16 cargoes of so-called soft red winter wheat to be shipped from the Gulf of Mexico in the second half, the Beijing-based researcher wrote in a report today. Panamax-sized vessels that carry wheat typically take cargoes weighing about 60,000 tons.
Imports may reach a “relatively high level” in the 2013-2014 marketing year, after totaling a projected 3 million tons in the current year, according to the report.
U.S. soft red winter wheat, including cost and freight, was quoted between $325 and $330 per ton on arrival at Chinese ports on April 5, equivalent to between 2,430 yuan a 2,470 yuan a ton after tax, according to the report. At Guangzhou port, the price of domestically produced so-called Jiangsu red wheat cost about 200 yuan more, according to grain.gov.cn., which is a unit of the China National Grain & Oils Information Center.
Wheat for May delivery added as much as 1.4 percent to $7.0875 a bushel on the Chicago Board of Trade and was at $7.05 at 1:35 p.m. in Singapore.
The large size and timing of the purchases indicate they may have been made for the state reserves, said Li Qiang, chairman of Shanghai JC Intelligence Co., the country’s biggest independent agricultural market researcher. There was no immediate shortage of wheat in China, he said.
China Grain Reserves Corp., the custodian of the state inventories, normally uses crops grown in the country’s northern wheat-producing provinces to keep supplies fresh across the nation, said Li. It may now be using imports to help refresh granaries in China’s south when prices to ship from overseas fall far enough to compete with rail freight from the north, he said.
Cheng Bingzhou, a Beijing-based spokesman for the reserves company, which is often referred to as Sinograin, didn’t return three telephone calls today seeking comment.