Chinese state buyers could raise wheat imports for millers later in the year as rain during the harvest has damaged some crops at the world’s top grower, with up to 7% of output seeing quality downgrades, analysts said.
Even a modest increase in China’s wheat imports could propel further gains in global prices, which have climbed nearly a fifth this year due to severe drought hitting the U.S. winter crop and fears that a developing El Nino will bring dryness to major agricultural regions.
Rainfall Hits Key Growing Regions
Heavy and prolonged rainfall hit central Hubei and parts of Henan, China’s largest wheat-producing province, in late May, just as farmers entered the harvest period.
Henan accounts for more than a quarter of China’s wheat output. Four analysts estimated that excessive rainfall caused between 4.8 million and 10 million tons of wheat to sprout, a relatively limited and manageable volume, as drier weather after the rains helped contain damage.
Sprouted wheat is typically unsuitable for milling into food-grade flour and is downgraded for use as animal feed.
“This year’s winter wheat crop remains on track for a larger harvest, with the volume of downgraded wheat expected to remain at a relatively low and manageable level,” said Rosa Wang, an analyst from Shanghai JC Intelligence.
Import Demand Expected To Rise
China, the world’s biggest wheat producer and consumer, typically meets most of its requirements from domestic supplies, buying only limited quantities of top-grade grains.
In 2023, widespread rain caused severe quality losses, leaving around 20 million metric tons of wheat fit only for livestock feed.
China imported 12.1 million tons that year, the highest level since at least 2014, and 11.18 million tons in 2024, both exceeding its 9.64-million-ton tariff-rate quota.
Imports beyond the quota face duties of 65%.
Damage in Hubei and southern Henan is expected to boost import demand, though increases usually come after a lag. “There were heavy losses in 2023, but imports didn’t spike higher until February 2024,” said Darin Friedrichs of Sitonia Consulting.
Imports have already rebounded this year, with China buying 2.43 million metric tons in the first four months, up 130% from a year earlier.
Risks Remain
China has yet to determine the final quality of its wheat, with only 42% of the planted area harvested.
Rain is expected to spread across key growing areas from Friday to Sunday, potentially slowing harvesting in parts of Hebei, Shanxi, Henan and Anhui.
Authorities in nine major wheat-producing provinces have mobilised teams to speed up harvesting and grain drying operations to minimise further losses.
(with input from Reuters)
