China is likely to exceed its record for US wheat imports during the 2023-24 marketing year due to lower domestic production, lower stocks and a drop in output from traditional suppliers.
Food security is a key issue for China, which since 2018 has kept at least one year's worth of wheat production in its end-of-year stocks. Stock levels typically match production levels.
But market participants are expecting a sizeable shortfall in Chinese wheat production this year, due largely to wet weather in Henan province, China's largest wheat producing region with 28pc of total production. The wet weather also caused a downgrade in wheat quality from milling wheat to feed wheat.
China's wheat production is now forecast at 137mn t, according to the December US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (Wasde), down from 137.7mn t last year, though market participants anticipate output to be 5mn-10mn t lower.
Similarly, the USDA forecast ending wheat stocks at 133mn t, implying a shortfall of close to 4mn t. This would mean China may need to import a record 16.5mn t for the 2023-24 marketing year instead of the USDA estimate of 12.5mn t.
The US may will likely play a role in making up that shortfall, and may break the the 2013-14 record for wheat exports to China, which was 4.3mn t, including 3.6mn t of US soft red winter (SRW) wheat.
So far during the 2023-24 marketing year, China has imported 3.4mn t as of the end of November, based on data from Global Trade Tracker and China's customs data. This includes 2.2mn t of US wheat, including 1.9mn t of US soft red winter (SRW) wheat. China has 1.8mn t of US wheat volumes that have been booked but not yet delivered. This brings China's total wheat imports to about 5.2mn t, with six months left in the marketing year.
The majority of China's wheat imports typically come from Australia, with Canada and France usually the next largest suppliers, followed by the US. In the 2018-19 and 2019-20 marketing years, when Australia's wheat production was affected by adverse weather, China turned to Canada and France to meet a large portion of its wheat needs.
But Australia's wheat production is forecast down nearly 37pc for the 2023-24 year, at 25.5mn t according to the USDA, while Canada's production is forecast to be down nearly 7pc to 31.9mn t. This also means a drop in exports by the two countries, which the USDA expects will be down by a combined 27pc to 42mn t — meaning China will need to look elsewhere for imports.
An up year for US wheat
US wheat production is on the upswing for the 2023-24 marketing year, forecast to rise by 10pc to 49.3mn t from the year earlier, according to the USDA.
The majority of the US wheat production increase is from SRW wheat, which is expected to rise by 32pc to 12.2mn t from the previous year. This also marks the first time since 2014 SRW production has exceeded 10mn t in the US.
The USDA forecast 4.7mn t of SRW will be exported by the US in 2023-24, representing 39pc of SRW production. Currently, 4.1mn t of SRW has been booked, according to the USDA weekly exports data as of 7 December, or 88pc of the forecast exports for SRW. This implies the USDA anticipates only 616,000t of SRW to be exported during the next six months, until the end of the marketing year.
In a similar year of 2013-14, the US exported 49pc of its SRW production, with China representing 47pc of the exports. Production in 2013-14 was 15.8mn t, with exports of 7.5mn t. The 2023-24 marketing year is similar with respect to the large amount of SRW produced, and with respect to exports, although the USDA only sees 39pc of production exported.
| China's wheat imports by country | pc | |||||
| 2023/2024 (through Nov) | 2022/2023 | 2021/2022 | 2020/2021 | 2019/2020 | 2018/2019 | |
| Total ('000 mt) | 3,396 | 12,890 | 9,282 | 10,292 | 4,780 | 2,681 |
| Canada | 24.6 | 20.7 | 14.2 | 31.9 | 24.2 | 68.5 |
| Australia | 52.9 | 60.5 | 47.6 | 14.7 | 24.3 | 3.1 |
| US | 8.3 | 9.1 | 13.6 | 29.3 | 6.2 | 1.6 |
| Kazakhstan | 11.0 | 1.3 | 0.8 | 1.8 | 7.0 | 19.2 |
| Russian Federation | 3.2 | 0.2 | 0.1 | 0.9 | 1.0 | 2.8 |
| France | 0.0 | 8.3 | 23.8 | 19.4 | 29.1 | 4.9 |
| Source: USDA | ||||||
| *Bold I largest for the year | ||||||
| China's wheat production | ('000 mt) | |||
| Marketing year | Production | Imports | Ending stocks (ES) | ES pc of Production |
| 2018/2019 | 131,441 | 3,145 | 138,088 | 105.1 |
| 2019/2020 | 133,600 | 5,376 | 150,015 | 112.3 |
| 2020/2021 | 134,250 | 10,618 | 139,120 | 103.6 |
| 2021/2022 | 136,946 | 9,568 | 136,759 | 99.9 |
| 2022/2023 | 137,723 | 13,282 | 138,818 | 100.8 |
| 2023/2024 (est) | 137,000 | 12,500 | 133,918 | 97.8 |
| Source: USDA | ||||
| Major global wheat exporters | ('000 mt) | |||||
| Marketing year | 2023/2024 (est) | 2022/2023 | 2021/2022 | 2020/2021 | 2019/2020 | 2018/2019 |
| Australia | 18,500 | 31,823 | 27,511 | 23,773 | 9,136 | 9,002 |
| Canada | 23,500 | 25,591 | 15,116 | 26,429 | 24,139 | 24,427 |
| US | 19,731 | 20,647 | 21,656 | 27,048 | 26,373 | 25,503 |
| Source: USDA | ||||||
