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Wheat buy won't affect Chinese market
SINGAPORE (OsterDowJones)--Wheat prices are likely to get a boost only if China imports more of the cereal, said trade participants Dec. 23.
Otherwise, news that Australia has signed a 1-million-metric-ton Wheat supply contract with China will unlikely move the market and could even depress sentiment.
"The international market could go up on this news, but that also depends on whether China will buy more" wheat, a Beijing- based senior Wheat trader with a global commodities firm told OsterDowJones.
"I don't see any change. In fact, I think prices could fall if the U.S. can't sell to China, since Chinese demand already went to Australia," added a Singapore-based Wheat trader.
Earlier Dec. 23, Australia's bulk Wheat exporter AWB Ltd. reported the sale of 1 million tons of Wheat to China National Cereals, Oils & Foodstuffs Import & Export Corp., or Cofco, the sole buying agent for China. The first shipment on this contract is due to load out of Western Australia in December.
AWB declined to disclose the purchase price of the wheat. But Australian hard Wheat is comparable with U.S. hard red winter or U.S. dark northern spring, which is priced Dec. 23 around US$170 a ton and US$179/ton, free on board, respectively.
The news comes on the heels of recent rumors that China could start to import more than 3 million tons of Wheat from Australia, Canada and the U.S. in the next year, following consecutive years of falling domestic output and dwindling stocks. While some trade participants said they believed China could import 3 million tons of wheat, others aren't convinced China's real demand is so high.
An AWB spokesman said besides the Australian Wheat deal, China also bought 0.5 million tons of Wheat from Canada earlier in December.
A Chinese delegation was scheduled to visit the U.S. in December to sign a deal to buy 1 million tons of U.S. wheat, but the trip was postponed after the U.S. imposed sanctions on certain Chinese textile imports.
When contacted, a Cofco official declined to comment on possible Wheat deals with the U.S.
In the first 11 months of 2003, China imported only 351,013 tons of wheat, down 42 percent on year, according to Chinese customs data. In 2002, China imported a total of 604,572 tons of wheat, down 12 percent on year.
Traders also said the Australian Wheat purchase isn't likely to affect domestic Chinese Wheat prices, since imported Wheat in China--perceived to be of higher quality--and domestic Wheat have different uses, and the cost of imported Wheat is much higher.
Date: 1/22/04
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