China trade: Big interest in Australian wheat, and overseas corn and barley

Barley may have been spurned, but China has bought more Aussie wheat in four months than in each of the 2015 to 2019 calendar years.

China has become a big buyer of Australia wheat this season.

China may have spurned Australia’s barley but it has become one of the local grain industry’s biggest buyers of wheat.

In the four months from last December through to March this year, Australia has exported more than 1.1 million tonnes of wheat to China.

Putting that into perspective, China has bought more Australian wheat in those four months than what it has for each of the 2015 to 2019 calendar years, according to Thomas Elder Markets analyst Andrew Whitelaw.

“We are doing no barley into China but putting lots of wheat in there,” Mr Whitelaw said.

China has been progressively buying massive amounts of wheat, corn and barley during the past year while subsidising its farmers to grow more grain.

Mr Whitelaw said Chinese imports of corn have risen from a normal level of less than six million tonnes to 25 million tonnes since last January.

He said while the pig herd was returning to normal levels after being hit by African swine fever it could not account for the large corn imports.

“Demand (driven by a larger pig herd) doesn’t change that much to account for these imports,” he said.

Mr Whiteside said one theory was the national stock recording system might have underestimated stockpiles in years past.

But he said the most likely scenario was that big floods during the past year had wiped out China’s corn crops.

Grain Growers Limited chairman Brett Hosking said China was a huge importer of corn until it became too expensive, so it switched to wheat.

“Australia has been a huge beneficiary of that,” Mr Hosking said.

“But all the risks about trading with China are still there in the background and I imagine traders factor in a bit of risk margin there.”

Big sales of grain come as China announced 20 billion yuan ($A4.1 billion) in subsidies to its grain farmers two weeks to help them cope with rising input costs.

China is one of the largest subsidisers of agriculture in the world, with the central government estimated to have provided about $A280 billion to its farmers in 2016.

Mr Hosking said he hoped China was playing within World Trade Organisation rules in handing out subsidies.

“As one of the least subsidised agricultural countries in the world, we are not a fan of seeing our competitors being subsidised by their governments,” he said.

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