China takes advantage of price decline to buy wheat
Taking advantage of a decline in world grain prices, China bought 0.5 million tonnes of new-crop Australian wheat in recent deals.
The country's wheat purchases come as the China National Grain and Oils Information Centre (CNGOIC) raised its forecast for corn and wheat imports in 2011/12, a bullish factor for global prices <Cc1> <Wc1>.
In addition to buying US corn in recent weeks, China's purchase of 500,000 tonnes of low-grade Australian wheat in the last two weeks - more than half of 963,657 tonnes it bought in the first nine months of this year - indicates Beijing's move to stock up grains.
"We are seeing a reasonable amount of new-crop wheat being sold into China, which is due to the fact that it is still cheaper than corn," said one Sydney-based trader. "The market is talking about 10 cargoes (of around 50,000 each) for shipment mostly in January and February."
Analysts and traders expect China, the world's second largest corn consumer and No.1 wheat consumer, to buy larger volumes of grains to restock its depleted reserves.
China's growing population is getting wealthier and eating more meat. As a result the country is producing more meat from livestock herds fattened on corn and even wheat, which is replacing expensive corn to some extent.
Private forecasts, including the US Grains Council, suggest China may import up to 10 million tonnes of corn in the current marketing year, which would make China, once self-sufficient in corn, the world's second largest importer behind Japan.