Cereal and oilseed imports to China, the world's biggest buyer of farm goods, will remain near record highs this year despite a recent spate of cancellations as lower global prices and a domestic output shortfall prompt purchases, reported Reuters.
China's wheat imports from Australia in January and February this year have nearly quadrupled from the same time last year, the latest customs data show. That trend should continue even after Beijing cancelled or postponed 1 million metric tons of Australian wheat last week.
The cancellations, along with those for about 500,000 tons of US wheat, had raised concerns of flagging Chinese demand, which because of its outsized role in global agriculture markets could have led to lower prices.
But traders and analysts say the cancellations will not impact overall demand as lower wheat prices will spur buying, along with more government funds allocated to boost grain and oil seed stockpiles.
"China's imports of wheat and barley from Australia are running at break-neck speed," said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.
"And they are buying large volumes of soybeans, corn and wheat from other origins as well, such as the United States, France and Ukraine. The reality is that grain imports are going to be similar to last year's record pace."
China spent $234 billion on agriculture imports last year and is the world's biggest soybean buyer, taking more than 60% of the oilseed shipped worldwide, mostly from Brazil and the United States.
It has also become the top wheat buyer in recent years, particularly for higher quality grain, mostly from Australia, Canada and the US China was the second-largest corn importer last year, mainly for animal feed, with buying driven by higher local prices.
Crush margins turning positive this month have driven soybean imports, with processors in the hub of Rizhao making 114.29 yuan ($15.88) per ton after incurring losses since October.
"Crush margins in China have improved as Brazilian prices have declined due to a big crop entering the market," said an international grain trader in Singapore. "We expect buying to pick up from April and overall China's imports this year will be similar to last year."
China bought 99.4 million tons of soybeans in 2023, up 10.3 million tons from a year earlier.
The US Department of Agriculture forecasts China's soybean imports at 103 million tons in the marketing year ending Aug. 31, 2025.
"Increased soybean meal inclusion rates due to competitive prices, stable demand in the poultry sector, and growing demand in aquaculture is expected to offset weaker demand in the swine sector," it said in Wednesday's report.
China has been stockpiling more food in the aftermath of supply chain disruptions from the coronavirus pandemic and the Ukraine war.
A slowing economy has moderated import growth, traders and analysts said, but demand continues to rise with a growing middle class in the nation of 1.4 billion people.
Opportunistic buyer
For wheat, traders said the size and quality of the June harvest will determine China's imports, although Beijing is expected to continue buying higher quality grains for bread and pasta.
"The issue is that China will always need to buy good milling wheat from the US, Canada and Australia," said Stefan Meyer, a grains broker at StoneX in Sydney. "China needs wheat to blend with its domestic wheat quality, which is not very good."
Crop quality declined because of adverse weather ahead of last year's harvest, prompting record imports, with some of the damaged wheat believed to replace corn in animal feed.
However, China's corn imports have been rising as feed makers take advantage of lower international prices.
China imported 6.19 million tons of corn in the first two months of this year, up 16% from a year ago. Full year imports are likely to remain steady, a Shanghai-based analyst said.
China also snapped up Australian barley for malting and animal feed after lifting punitive duties on the grain in August. In the first two months of the year, China's barley imports nearly tripled from a year earlier to 2.71 million tons, mostly from Australia.
