China may boost wheat purchases from Australia by 67 percent this year, said grain handler Emerald Group Australia Pty, adding to signs that imports by the largest user will jump after rains hurt domestic crops. Prices advanced.
Shipments may reach 2 million metric tons in the 12 months started July 1 compared with about 1.2 million tons a year earlier, Brian Dalitz, general manager of trading and marketing at the Melbourne-based company, said in an interview.
Increased buying may help to absorb record global supplies and support prices in Chicago that have tumbled into a bear market. China may more than double imports to 8.5 million tons in 2013-14, the highest since 1995-96, the U.S. Department of Agriculture estimates. That would rank the country second among buyers after Egypt, compared with 16th the previous season, and offer opportunities for shippers from Australia to Russia.
“There’s likely going to be more demand for milling-quality wheat into China this year,” said Graydon Chong, a grains and oilseed analyst at Rabobank International in Sydney. “We certainly will see competition.”
Wheat for September delivery gained as much as 0.9 percent to $6.6675 a bushel today on the Chicago Board of Trade, and was at $6.625 by 4:51 a.m. local time. Most-active prices in Chicago have lost 29 percent over the past year, and touched the lowest since June 2012 this month. By contrast, futures on the Zhengzhou Commodity Exchange touched a two-year high this week.
Wheat yields and quality in Henan, Hubei, Anhui and Shandong were hurt by excess rain in May and June, the USDA’s Foreign Agricultural Service said in a report posted on its website July 3. Heavy rain caused newly matured wheat to germinate in parts of provinces including Henan and Shandong, the top two growers, which hurt output, the China National Grain & Oils Information Center said last month.
China’s imports of Australian wheat and flour climbed to 1.9 million tons in the year ended June 30, 2012, from 530,000 tons a year earlier, according to the Australian Bureau of Agricultural and Resource Economics and Sciences. Indonesia is typically the biggest buyer of Australian wheat.
“China bought quite a bit of wheat from Australia last year, with a lot of it used as feed wheat, and this year it’ll probably buy more if Australian crops turn out cheap,” Zhang Zhixian, an analyst at Cngrain.com, said from Zhengzhou.
The global wheat harvest will climb 6.5 percent to 697.8 million tons in 2013-14, the highest ever, on bigger harvests in Russia, Kazakhstan, Ukraine and the European Union, according to the USDA, which sees China’s crop unchanged at 121 million tons. Production in Australia, the world’s third-biggest exporter in 2012-13, will increase 15 percent to 25.4 million tons in 2013-14, the Australian government forecaster says.
“If we do have a large crop year in Australia, there’ll be more exports going out, and we think that China makes up a fairly sizeable chunk of that,” Rabobank’s Chong said by phone today. “We are expecting larger crops out of the U.S. and the Black Sea crops are already proving to be very cheap.”
From June 1 to July 11, combined sales and shipments of U.S. wheat to China were 3.3 million tons, according to USDA data. Total U.S. wheat exports will increase 6.5 percent to 29.3 million tons in 2013-14, according to the agency.