China has indicated that ‘enhanced inspections’ on Australian wheat will be enforced going forward. It is another shot across the bow amid increasing tension with Beijing.

It is no doubt a political move, another warning that pushing China too hard on COVID, South China Sea, Hong Kong, Human Rights, spies/consular officials etc. etc. will not be tolerated by the Party.

At this stage is does not affect our wheat business into China.  But it does make anyone wanting to do business with China very nervous.  There is something like 700kmt already booked for Nov/Dec delivery into Chinese ports with 1.5mmt average yearly demand (ABS).  There is nothing like a cargo getting rejected at port to put a dent in your PnL.

The immediate effect has been a spike in US futures as the US will be banking on the fact that demand will swing to them.  The Chinese have been on a recent buying spree, particularly on US corn, beans and wheat.  Globally, demand for wheat is seen as strong as countries look to be food secure with the threat of COVID 2.0 hanging around.

Hopefully, it is all just a storm in a teacup.  Australia’s photo-sanitary protocols are second to none and I would be sure that bulk handlers here would stand by their practices.  But if China – or any customer – wanted to find a problem, they would.

This is not an import tariff (i.e. barley), and as such doesn’t directly restrict our access into China. It is however a threat and needs to be watched.

The week ahead….

Steady as she goes.  The world is getting more comfortable with production and with record production and carryout, I suspect the market will flatten out from here.

Have any questions or comments?

We love to hear from you!

Click on graph to expand

Click on graph to expand

Data sources: USDA, Reuters, ABS, Mecardo

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
Grains & Oilseeds

Exporter weather in the spotlight

Grain markets continued to see support last week, with CBOT wheat (Dec’ 20) break-ing through key technical resistance of 600¢/bu. The strength of the rally

Read More »
Percentiles with a background image of hay bales

Percentiles – October 2020

Mecardo’s Percentiles update for October 2020. Click below to view the latest report Grains  Oilseeds Sheep and lambs Cattle Wool Dairy Fuel Percentiles are an important

Read More »
Grains & Oilseeds

Black Sea blues

Interesting that the global wheat market is focused on potential production problems next year, and seemingly forgetting about the record 773mmt crop this year. We

Read More »

Don’t have an account with us? Join free.

You can have full premium access to all of our content with a monthly or annual subscription. 

Alternatively, create a free account to access our Insights blog and two free premium article a month!

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the issues affecting the agricultural industry. 

WA sheep farmer looking at empty yards, photo by Chantel Mcalister
Research: Impact of the live sheep export moratorium

In this report for LiveCorp and MLA, we consulted with stakeholders in the sheep supply chain to identify the impact of the moratorium on the live sheep export trade.

Image of harvested grain pouring into a chaser bin

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.