USDA raises China's 2019-20 wheat import estimate by 25% as trading gathers pace

The US Department of Agriculture has raised China's wheat import estimate for the 2019-20 marketing season (July-June) to 4 million mt, up 25% from its previous estimate.

If achieved, China's 2019-20 wheat imports would reach a three-year high, according to the USDA's World Markets and Trade report released Tuesday.

The USDA said it was raising China's wheat import estimate on the back of the faster pace of trade seen to date this season and large purchases made recently.

China in recent months has booked large wheat consignments from the US, France and Australia, according to sources.

The country earlier bought 2.6 million mt of wheat from the US during both the 2016-17 and 2017-18 marketing seasons, but its purchases of US wheat fell to just 42,000 mt in 2018-19 due to the trade dispute between the two countries.

The US had also lodged a complaint with the World Trade Organization in 2016 over China's use of tariff-rate quotas or TRQs for rice, wheat and corn, arguing they limited market access for US grain exports. The WTO ruled in favor of the US last year.

Under the ruling, China agreed to meet import quotas set by the WTO by March 31.

Under China's internal TRQ system, the country is supposed to import 9.6 million mt/year of wheat, but the quota generally remains underfilled every year, according to the US Trade Representative.

China imposes tariffs ranging from 1% to 90% on various wheat and wheat products imported from the US. The country is the world's second-largest wheat producer and administers a minimum support price program to support domestic production. It is expected to produce 133.5 million mt of wheat in 2019-20, up 1.6% on year, according to a USDA report.