Buyers in China haven’t been observed making any major purchases for a couple of months, according to a number of traders. With domestic prices so low, that trend is likely to continue through the third quarter, they said, declining to be identified discussing sensitive commercial matters.
That should alarm China’s foreign suppliers, particularly after Turkey, the world’s fifth biggest buyer of wheat, dealt a blow to demand last week by halting its imports of the grain for four months to shield local producers. Feeble consumption for similar reasons from China, the No. 2 importer, would only add to the market’s jitters.
Wheat and corn imports from January through April were actually running ahead of last year’s pace. That makes the sudden drop-off in activity all the more startling, and could leave international markets vulnerable to declines if China is indeed adjusting its strategy on overseas purchases. Improved harvest conditions are likely to help narrow China’s wheat deficit from almost 17 million tons in this marketing year to under 7.5 million tons in 2024-25, resulting in reduced import demand, according to Charles Hart, senior commodities analyst at BMI, a unit of Fitch Solutions. Corn imports will also moderate in 2024-25 as output increases, he said.On the demand side, China’s pig herd is shrinking and meat consumption remains subdued.
While buyers will be keen to use up their quotas, the economics of importing more than that makes much less sense, said BOABC’s Ma.