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China's April wheat imports almost double on year to 603,013 mt

Highlights

China's wheat imports rose 99.4% year on year to 603,013 mt in April, after posting a 140% surge in March, customs data released Thursday showed.

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Imports over January-April totaled 1.67 million mt, also almost doubling from the same period a year earlier.

Traders said imported cargoes from the US and Australia were cheaper than domestic premium wheat prices in the period, while the country's appetite for premium and specialty wheat was seeing strong growth from a rapidly expanding bakery and pastry sector.

China's domestic price of premium grade domestic wheat has averaged Yuan 2,980-3,000/mt ($433-$436/mt) over April and May to date, while imported high protein wheat from the US has averaged $270-$280/mt CFR Shanghai, buyers said.



Wheat imports into China are tightly controlled by tariff rate quotas, or TRQs, set at 9.64 million mt for 2017, unchanged from the year before. Of this, only 10% is allocated to private buyers. If private buyers import more than their allocated volume, a 65% import tax is imposed.

However, given the wide price gap between domestic and imported cargoes and the shortage of suitable quality supply domestically, private buyers have been finding it feasible to import outside of their allocated volume since late 2016, sources said.

China also imported 2,000 mt of Russian wheat in April, its first such bulk shipment in more than 40 years, after the two countries signed an agreement on quarantine inspection requirements for wheat, corn, rice and soybean in December 2015.

COFCO, China's state-owned company responsible for wheat import and distribution and quality control, said it now planned to import 1 million-2 million mt/year of wheat from Russia, and this could rise to 5 million mt in future given the country's rising demand for protein.

China's One Belt, One Road initiative to revive ancient Asia-Europe trade routes could be also a driving factor in the ambitious target, sources said.

However, traders doubted 2 million of Russian wheat could arrive in China in 2017-2018 given current infrastructure constraints.

Buyers also continued to prefer premium grades from the US and Australia, sources said.

--Alexis Gan, alexis.gan@spglobal.com
--Edited by Wendy wells, wendy.wells@spglobal.com