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Will China buy a lot of cereals in the coming months? This is the question that worries the markets today, because the volume of Chinese imports will determine the prices of tomorrow.
The leading importer of agricultural products, the Middle Kingdom has been breaking grain import records for two years. China has bought so much that it has siphoned off surplus stocks and part of American reserves. But will she always remain so active?
« No one can pin down Chinese demand », explains François Luguenot, expert in the agricultural raw materials market. And that is what is weighing on the markets today. Purchases from China are closely scrutinized for any sign of a tense year. If China buys little, prices will relax, if on the contrary it continues at the rate of the previous two years, then the markets will inevitably tense up. Even if the volumes are tiny, say some analysts, this may be enough to drive prices up.
The next Chinese harvest still very uncertain
Chinese imports will mainly depend on the upcoming autumn harvest locally. Two years ago, the country ran out of 12 million tonnes of wheat, according to the International Grains Council (IGC). For this campaign which is ending, the deficit should decrease. Given the global context, Beijing’s incentives to produce locally have been strong. The authorities have warned that to have good harvests, labor must be available and the machines must be able to be transported to wheat-producing regions. But the “zero Covid” strategy complicates inter-provincial exchanges and still fuels doubts about future productions.
Chinese stocks very high, but difficult to analyze
The other unknown which could perhaps limit imports and influence prices is the state of Chinese stocks. According to the International Grains Council, the country has nearly half of the world’s wheat stocks, the equivalent of nearly a year of Chinese consumption. High stocks therefore, but these figures for the moment leave many observers perplexed who are careful not to analyze them.