Drenching Rains Seen Driving China Wheat Imports Higher

Heavy rainfall ahead of China’s wheat harvest degraded the grain’s quality and is expected to increase the country’s need for imported wheat.   

China’s wheat imports are already at a record pace for the first four months of 2023, as shown in this Gro display. Year-to-date imports are 60% higher than similar time frames in 2021 and 2022, which were both record import years.

In addition, China’s domestic wheat prices have dropped sharply relative to other grains since the start of the year, leading to greater substitution of wheat — both imported and locally grown — in place of other grains in animal feed mixtures. 

The USDA in its June WASDE report last week sharply raised its estimate for China wheat imports in 2023/24 to 12 million tonnes, up 14.3% from the agency’s estimate a month earlier, as Gro wrote about here. Estimated wheat for feed use was revised higher by 6% to 34 million tonnes. 

The expected increase in wheat imports comes as China has undergone a structural shift to become a major net importer of grains, a trend Gro’s models have highlighted since January 2020. 

Excessive rain late in the crop cycle can depress wheat’s protein content and spoil part of the crop, lowering wheat production for human consumption — known as milling wheat — and driving an abnormally large percentage to animal feed use. 

Henan, the largest wheat-producing province, was inundated with rain for much of May, as seen in this Gro display. Heavy rains have also fallen in Shandong and Anhui provinces, other major wheat-growing regions. 

The extent of the wheat losses from the recent storms could take weeks to quantify. China’s winter wheat, which accounts for around 95% of total wheat production, is harvested in late May through June. The heavy rains also could delay the harvest and reduce final harvested acreage. 

Gro’s China Wheat Yield Forecast Model, which doesn’t distinguish between milling wheat and wheat that ends up as animal feed, is currently predicting the country’s total wheat production will increase from last year’s output.

China, although being the world’s largest wheat producer, is nevertheless a net importer of the grain. An increase in wheat import demand would have ripple effects around the world, at a time when global supplies outside the country are close to the tightest levels in more than a decade.  

China relies especially on Australia for wheat imports, but that country is expecting its next wheat crop will be down by more than 30% year over year due to the onset of El Niño climate conditions, as Gro wrote about here.