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China is scouring the globe for wheat, with annual imports on track to hit record levels, as buyers scoop up cheap supplies after heavy rains damaged the domestic crop.
Following a splurge on Australian wheat earlier in the year, large quantities have been booked this month from some of the other main exporters, including the US, Canada and France, according to traders, who declined to be identified discussing private business.
The buying spree comes after international wheat prices dropped to a three-year low at the end of September. Although that signals supplies are ample for now, China’s growing appetite adds an element of uncertainty to supply chains that have become increasingly vulnerable to war and protectionist trade policies.
“China’s wheat imports will be strong going forward, and for sure they will exceed the annual quota,” said Darin Friedrichs, co-founder of Sitonia Consulting Co. “It seems like China’s bought up all of the easily exported supplies from Australia and is now needing to go further afield.”
Beijing uses quotas to manage imports of staples like wheat. It allows 9,636 million tons a year of the grain at a 1 percent tariff, with 90 percent of the allocation going to government firms. Above that cap, the tariff rises to 65%, a level usually out of reach for private buyers but not for the state-owned giants.
For years, the quota was never used up. But that changed in 2020 as Beijing’s trade deal with the Trump administration boosted purchases from the US. Last year, total imports hit a record 9,96 million tons as buyers swapped in wheat for other ingredients in animal feed, and Chinese citizens eat more bread. China now vies with Egypt as the world’s top importer. –Bloomberg
Peter Tanyanyiwa
Online Reporter