Recent statistics released by the Chinese Government have surprised many grain analysts. Imports of all grain and oilseeds have surged over the past two months with record amounts of Australian wheat and Brazilian corn being imported.
Some grain merchants would argue that a lot of this demand is ‘fake demand’ as some of the imports are going to refill the Government reserves after destocking the past few years.
It is very interesting to note that despite the reported macroeconomic slowdown in China, we are seeing a surge in consumption of food. Some have suggested that the cause of this is Chinese deciding to spend more of their income on food and eating out, rather than investing in shares and property.
Whatever the driver, the implications for Australian grain prices have been and will be very positive.
China is now Australia’s largest destination for wheat having imported over six million tons already this season. After lifting the import ban on Australian barley, the trade estimated over one million tons has been purchased by China. All we need now is the ban to be lifted on Australian canola.
Mainland crop estimates have slid a little this week with a hot and dry forecast for September, local crops look fantastic.