China's wheat import could decline in 2024 amid shipment cancellations, delays

China's wheat imports could decline in 2024 as shipment cancellations and delays from multiple origins have raised concerns of weakening demand.

Trade participants expect China's 2024 imports to decline from prior estimates of 12 million-15 million mt for this year and potentially drop below 11.88 million mt in 2023. Imports in 2023 were 2.24 million mt above the tariff-rate quota of 9.636 million mt according to Chinese customs data. The TRQ for 2024 has been maintained at 9.636 million mt.

Australian and Canadian wheat shipments to China from multiple sellers have been delayed to the second and third quarters, from the first quarter, several trade sources said.

Fresh demand for Australian wheat has been relatively slow since the Lunar New Year holidays. Trade sources said they have seen more aggressive destination offers out of Australia for second-quarter shipments that could suggest efforts by exporters to shuffle shipping slots in the wake of China's Australian wheat shipment delays.

However, Australian wheat shipment delays have not been uncommon in the past years. "The [Lunar] New Year holidays always mess with their logistics, and this year is no different," a trade source based in South Australia said.

China had also delayed several shipments of Canadian Western Red Spring wheat from February and March to May, a grains trader with an international trading firm said.

The US Department of Agriculture also reported export sales cancellations of about 500,000 mt of US Soft Red Winter wheat to China in the week ended March 8.

Trade sources said falling global wheat prices could have spurred China to cancel their US wheat purchases. Since the start of 2024, Russian Wheat 12.5% FOB has weakened 17.6% to $201/mt, while the price of Australian Premium White Wheat FOB Australia has fallen 13.3% to $260/mt, Platts assessments from S&P Global Commodity Insights showed March 13. The price of Canadian Western Red Spring wheat 13.5% FOB Vancouver declined 7.7% to $286/mt during the period.

The falling prices have raised the possibility of potential cancellations of French wheat exports to China.

"There could be a possibility of Chinese buyers renegotiating the trade price for some French wheat cargoes, which had been booked at a higher price several months ago, but the market has ... not received any requests for defaults yet," said a trade source based in London. "With the new-crop French wheat hitting the market in July, and considering current wheat stock levels, traders may not be keen on allowing any export sales cancellations."

China on track for larger wheat crop

Barring any unforeseen poor weather events, China could reap a larger, higher-quality wheat crop in 2024 that could weigh on its imports.

China Meteorological Administration said March 8 that four snowfall events across the country's major winter wheat growing regions between January and February boosted soil moisture and allowed most crops to exit winter dormancy safely, with only minor frost damage expected in some areas of Jianghuai and Jiangnan. As a result, the crop growth stage was seen largely on a par or better compared with the same period a year earlier.

In 2023, unseasonal torrential rains had damaged and downgraded a significant proportion of the wheat crop to feed-grade wheat, with official statistics pegging total wheat production in 2023 at 134.53 million mt, a 0.9% decline on the year.