They may peak in Q1 2022. And this despite strong harvest figures in many countries.
In the world market, a difficult situation has developed with wheat with high protein quality: a similar situation was observed in 2007-2008.
And China, which produced a record 136.9 million tons of wheat, could push prices up. But during the growing season, Hebei, Anhui and the Yangtze River Basin (key for wheat production) received a lot of rainfall.
Analysts believe that the recent rise in Chinese wheat prices to record levels is a consequence of poor grain quality.
China may find itself in a situation similar to France: only 30% of the French wheat crop will be suitable for the production of bakery flour, the remaining 70% will go on sale as feed.
In 2020/21 Canada was the largest exporter of wheat to China (out of 10.6 million tons purchased by the country, 3.5 million tons were imported from Canada).
Further on the list of the largest exporters of the PRC were the USA, France and Australia.
What will the four leading exporters be able to offer China this year?
France
For the above reasons, as well as due to high freight rates, the country will not be able to meet the PRC’s needs for milling wheat.
Australia
Gathered a very high harvest: according to forecasts of the US Department of Agriculture, the country will export about 24.5 million tons (in 2020/21 MY, exports amounted to 22 million tons).
But due to difficult political relations between Australia and China, the latter is unlikely to buy more than 2 million tons of Australian wheat.
Conclusion: China needs to increase purchases of milling wheat from other countries, including Canada and USA , where the harvest was short.
Some loss of the Chinese market for Australia is not so dramatic: the country last year regained a significant share of the markets of Indonesia, Vietnam and the Philippines.
Since the beginning of 2021, Indonesia began to reduce purchases of Canadian wheat and greatly increase purchases of Australian wheat.
In addition, Indonesia is increasing imports of wheat from Ukraine: in the first three months of 2021/22 MY, the country imported 2.3 million tons (the volume of imports for the entire last year amounted to 2.6 million tons).
Globally, milling wheat shipments are declining due to production problems in Canada, the United States and Russia, as well as the poor quality of French grain.
In Europe, prices for milling wheat are close to record levels for the same time of the year.
According to preliminary estimates, China will import another 10 million tons of wheat in the 2021/22 agricultural year, but due to quality problems, the total volume may be even higher.
And the increased global demand for high-protein wheat could lead to another round of prices.
