China’s biggest weekly purchase of US wheat since 2014 has led to support in prices, although in the long term there are still expectations that grain markets will subdue from large Brazilian maize supplies expected into 2024.
The latest AHDB Grain Market Report shows the purchase of 1mt of soft red wheat that supported Chicago markets has filtered into domestic grain markets. UK feed wheat futures (May-24) gained a little on the week to close on Thursday 7Th December at £197.00/t. New crop futures (Nov-24) fared even better closing at £208.45/t, up £2.20 over the same period.
It might have been even higher but our domestic market has been a little muted through the continuation of large Black Sea supplies currently coming to the market.
The Chinese purchase is in response to its domestic wheat harvest being damaged by rainfall. Currently the USDA peg Chinese wheat imports at 12 Mt in the 2023/24 marketing year, down from 13.3 Mt last season. But over the last three years China’s reliance on imported wheat has increased compared to pre-2020/21 season levels, so this damaged harvest could lead to even higher imports.
However, this is still a watch point as it was reported at the start of last week that several cargoes of French wheat destined for China that were due to load in December have been postponed until March. This could dampen some of France’s export hopes. With China’s recent purchasing of US wheat, it raises the question of could these French postponements lead to cancellations into 2024? This would put a further dent in France’s export campaign, which is facing pressure already from cheaper Black Sea origin wheat.
Over the same period, Paris rapeseed futures (May-24) fell to €438.00/t. The pressure came from Chicago soyabean futures which ended down with rain forecast for Brazil, easing soyabean crop condition concerns. However Nov-24 contract held at €454.25/t.