China cancels shipment of Australian wheat

Grain leaders say the cancellation of one-million metric tonnes of Australian wheat is not politically motivated. See the overall concern for farmers.

Farmers and agricultural analysts say China’s cancellation of one million metric tonnes of Australian wheat is due to a falling market.

Wheat prices domestically have fallen by $70 to $80 a tonne since harvest, dipping as low as $270/tonne.

Episode 3 director and analyst Andrew Whitelaw said there was no evidence the cancellation of Australian wheat was political.

“It is a trade matter, there was a lot of wheat that had been purchased months ago, and now we have a falling market, and the market may fall even further,” he said.

Mr Whitelaw said the theory was that China could cancel the shipment and then buy wheat at a cheaper price. He said on the balance of probabilities wheat was plentiful on the world market.

Episode3 director and analyst Andrew Whitelaw. Picture: Nikki Reynolds

He said there were rumours that volumes of wheat being sold out of France may also be cancelled.

The issue directly affects grain-traders who then go back to the market and re-sell the shipment however, farmers don’t directly lose out on locked in prices or contracts.

But the bigger picture for farmers was the overall concern about a falling market.

NSW Farmers grains committee chairman Justin Everitt said there had been a massive price drop since harvest.

“I am kicking myself that I didn’t sell all of our wheat at harvest time,” he said.

Mr Everitt estimated he still had around 20 per cent of the 2023 crop stored on farm.

Grain Producers Australia southern region director Andrew Weidemann said there was a lot of wheat to meet the global trade at the moment.

However, he emphasised that Australian wheat was “well and truly sought after”.

He said the Chinese buyers hadn’t provided a direct reason for the shipment’s cancellation; however, he was confident it was not politically motivated.

On the positive, he said canola had started to make some gains after dropping below $600/tonne a couple of weeks ago. This week, the oilseed crop was tracking at $632/tonne at Victorian ports.