Agriculture & Food

The performance of the wheat market this year is very eye-catching, but this is not due to the soaring wheat prices, but rather to fluctuations and increased uncertainty, making the market unpredictable. Especially after some wheat varieties experienced quality differentiation due to weather factors this year, the market situation has become more volatile. In addition to the new wheat market, the performance of imported wheat in international trade is also very impressive, due to the rare surge in the quantity of imported wheat in China this year.

Wheat, as the second largest food crop in global production after corn, has a wide market demand and planting range, making it an important commodity in international trade. Flour produced from wheat is an important raw material in many countries, and if there is a shortage of supply, it may cause a serious food crisis. With the support of cold chain transportation, cross-border and even intercontinental wheat transportation is not difficult to achieve technically. According to WTO statistics, wheat from international trade is an important source of market demand, supporting about a quarter of the supply, and 80% of international wheat trade is completed through ocean transportation. For net food importing countries, the proportion is even higher. Therefore, maintaining smooth sea transportation is crucial for meeting global market demand and reducing the risk of food crises. The WTO and the International Grain Council (IGC) have jointly developed a new monitoring platform that provides data on wheat shipping through port data (including monthly summary data and real-time data reflecting short-term trade changes), providing support for food safety and supply chain risk prevention.

According to data previously released by the customs, the quantity of wheat imported into China in May this year was 1.15 million tons, an increase of 71.5% compared to the previous year. However, from January to May this year, China's total wheat imports reached 7.19 million tons, an increase of 62.5% compared to the previous year. That is to say, in the first five months of this year, the quantity of imported wheat in China has already reached 72% of last year's total.

However, with the increase in global wheat supply, intensified market competition, and the entry into force of the Black Sea Grain Agreement, as well as a significant decrease in shipping logistics costs due to oil prices and overcapacity, global maritime trade flows have accelerated since the end of 2022. In terms of the distribution of import and export countries, Russia has exported 3 million tons, making it the largest exporter of wheat. Australia ranks second with exports exceeding 2 million tons. Next up are Canada (1.4 million tons), the United States (800000 tons), Ukraine (500000 tons), and France (400000 tons). During this monitoring period, the net importers of global seaborne wheat were mainly China, Indonesia, Algeria, Egypt, and Spain. The import and export demand of these major wheat trading countries, due to their huge scale, has a more significant impact on the global wheat logistics network, and to some extent, it also ensures the interests of producers and the food security of the consumer market.

But this is not over yet, as according to the predictions of the US Department of Agriculture, China's wheat imports may reach 12 million tons in 2023/24, which means that China's wheat imports will approach the previous historical record of 12.5 million tons or even exceed this number. However, the recovery of wheat imports is uneven, and factors such as climate change and market consumption demand have a significant impact on the import scale. Imports from certain regions of Africa, South and Southeast Asia, Latin America and the Caribbean have decreased, while imports from West Asia, East Asia, North Africa, Europe, and Oceania have increased. The wheat harvest in North Africa is poor, and it is necessary to fill the market gap through imports. The import volume of wheat from Algeria, Morocco, and Tunisia in North Africa has increased rapidly, while Egypt has decreased. West Asia's wheat sea imports also performed strongly. The import volume in the first five months of this year was 42% higher than the same period last year, a quarter higher than the previous quarter, and this trend is expected to continue. West Asia and North Africa mainly import wheat by sea from Russia, with imports of 1.7 million tons and 1.6 million tons in the first five months of this year, respectively. Compared to the previous quarter, wheat imports from West Africa, East Africa, and Central Africa were significantly lower. The import volume of wheat from East Africa has significantly decreased in Djibouti, and the wheat imported here is mainly transported to Ethiopia. The local wheat harvest in Ethiopia is good, which to some extent reduces import demand. The wheat imports from Madagascar and Kenya in East Africa were also lower than the previous quarter, but there was a slight increase in Somalia and Tanzania. The sea freight imports of wheat from Nigeria, Ghana, Liberia, and Togo in West Africa have decreased, and the scale of the decrease exceeds that of C ô te d'Ivoire and Guinea. The import volume of wheat from Caribbean countries grew rapidly in May, with Cuba, Haiti, and Trinidad and Tobago experiencing the fastest growth, but still 16% lower than last year. The decrease in wheat sea freight imports in South Asia is mainly affected by Iran, which has experienced significant delays in unloading at Iranian ports in recent months, affecting wheat imports. Some Southeast Asian and Central African countries have the longest shipping time for wheat, while Indonesia and the Philippines have seen a rapid increase in wheat imports. Western Asian countries, driven by the rapid growth of wheat imports from Saudi Arabia and Türkiye, increased by 25% year on year. It is worth noting that there is a clear relationship between the import and export volume of wheat and the prices of related transactions among all parties. In addition to the actual market supply and demand relationship, the use of wheat as a financial investment target by international investors, as well as changes in the value of major currencies, also have a direct and important impact on the wheat price in the international trade market.