China suspension of economic dialogue with Australia not seen hitting wheat trade: sources

New Delhi — China's decision to suspend trade activities under a strategic economic dialogue with Australia is unlikely to affect Australian wheat exports in the 2020-21 marketing year, as most of the supplies expected during the season have been already booked or sailed, sources said.

China on May 6 said it was indefinitely suspending all activities under the China-Australia Strategic Economic Dialogue, countering a series of measures, which China said were taken to disrupt the normal exchanges and cooperation between the two countries.

The trade dispute between China and Australia has been brewing since 2020, with China imposing heavy trade curbs on commodities like barley and coal flowing from Australia.

However, wheat flows from Australia to China have continued, but at a slower pace.

So far in the current season, Australia has exported 1.2 million mt of wheat to China against the overall estimate of 1.8 million to 2.0 million mt for the whole season, according to Australian Crop Forecasters, a Victoria-based crop information service.

Australia's wheat marketing year runs from October through September.

Overall, Australia is expected to ship 22 million mt of wheat in the 2020-21 marketing year, James Maxwell, manager at Australian Crop Forecasters, told S&P Global Platts.

The lost business to China would only represent around 3%, or around 600,000 mt, of all Australian wheat exports, Maxwell said.

Australian Crop Forecasters said it is hopeful the likely fall in exports can be easily offset by other destinations, as higher demand emerges from other buyers, mostly in South Asia.

According to the agency, China's share in Australian total wheat exports has been around 1.1 million mt, or around 8%, over the past five years.

The suspension of trade activities may not have an immediate impact, but the move would make some traders hesitant to engage in business, Maxwell said.

So far, there has been no impact on Australia's wheat trade, and the move sounded more like an economic policy-related issue rather than targeting any particular commodity, a source said.

Australian wheat prices May 6 rose $6/mt on the day, mostly on higher gains in the futures market.

APW wheat FOB Kwinana, Australia was assessed at $298/mt, while ASW wheat FOB Kwinana, Australia was seen changing hands at $296/mt, Platts data showed May 6.