Market Morsel: China strikes at Australian wheat?
In another in a series in what seems like blows to Australia-China agricultural trade, the customs agency have highlighted additional checks on wheat. This seemingly only applies to Australian vessels (ABC).
This announcement comes hot on the heels of the recent announcement that CBH marketing was banned from importing barley into China.
Read our thoughts on the recent barley announcement ‘Shot across the barley bow’
The announcement is for all intents and purposes telling Australian exporters that they will be extra stringent on checks. This should be worrying for exporters who already have sales on the books. If an inspector wants to find an issue with a cargo, it is effortless to do so.
China is not as important to Australian wheat, as it is to barley. On average, since 2008, China has been a customer for 6% of our wheat exports. Interestingly 2018 was the lowest at 1% of exports, and 2019 the highest at 15%. That being said during the same period, we were responsible for an average of 39% of Chinese imports.
It has to be noted though, that China is set to import the largest volume of wheat in recent years during the 2020/21 season, with forecasts of 7mmt.
The extra risk may reduce our capacity to participate in this market, however the risk is less to Australian producers than locking out the barley market.