An interesting tweet earlier this week pointed to China's supply and demand balance for wheat and the rationale for recent activity as an importer in the global trade. According to today's USDA report, China's stocks will grow from 151.68 million metric tons in 2019-20 to 163.68 mmt in 2020-21, which represents 51.3% of global stocks. When compared to their estimated annual use of 130 mmt, China's estimated stocks for 2020-21 account for 126% of annual use.
The fact that China is actively importing wheat may seem a hard circle to square for market watchers. What seemed puzzling early in the week may be more so today, after the USDA increased its estimate for China's imports by 1 mmt this month to 7 mmt. As seen on the attached graphic, this would be the largest volume imported by China since 1995-96, taking out the highs in 2004-05 and 2013-14, as found in the USDA's estimates.
Looking across USDA tables of 2020-21 imports by country, Egypt retains its No. 1 spot at an estimated 13 mmt of wheat imports forecast for 2020-21, Indonesia follows at 10.8 mmt, while China, Turkey and the Philippines are shown as tied for third at an estimated 7 mmt.
On the supply side, the USDA boosted its forecast for Canada's all-wheat exports to 25 mmt, which would be a record for Canada if achieved. Current estimates place the European Union as the third-largest wheat shipper in the word at 25.5 mmt, following Russia and the U.S. At the same time, estimates for the U.S., European Union and Canada are within a narrow 1.5 mmt range, so it may be possible to say that second place is up for grabs.
As of week 5 Canadian Grain Commission data, or the week-ending Sept. 6, Canada's all-wheat exports through licensed facilities totaled 2.4599 mmt, up 15.8% from last year. Wheat movement through licensed terminals is pegged at 2.1389 mmt, the largest volume shipped in this period in six years, while 31.3% higher than last crop year and also 31.3% higher than the five-year average. Movement of durum is trailing, with 321,000 mt shipped in the first five weeks, down 35.2% from last crop year while 0.8% higher than the five-year average.
Also of interest, Statistics Canada data shows China as Canada's top wheat destination in three of the four months from April through July, with an average of 349,818 mt shipped monthly.
Cliff Jamieson can be reached at firstname.lastname@example.org
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