CHINA is expected to need extra volumes of imported wheat after heavy rains hit harvests in the Henan province.

There is a potential that 10m-20m tonnes of domestic supply could be ruined due to flooding, which will lead to increased imports, according to Cleaves Securities head of research Peter Michael Christensen.

Local media are reporting that measures are under way to minimise losses as Henan, in central China, is the second-largest grain producer, accounting for almost 10% of the country’s total grain output. It is the largest wheat producer.

Heavy rains and high humidity had battered the region at the end of May into early June.

The US Department of Agriculture increased its estimate for China’s wheat imports in the 2023-24 season to 12m tonnes from 10.5m tonnes in the previous report due to domestic crop quality concerns, while imports in the current season were revised up by 500,000 tonnes to reach 14m tonnes with strong purchases from Canada and Australia.

According to Shipfix’s senior economist and quantitative analyst Ulf Bergman, increased wheat imports have added to the cargo order volumes for agricultural commodities bound for China, and the pick-up in volumes may favour the mid- and smaller-sized bulk carriers.

Weekly cargo orders for agricultural commodities loading in Australian ports destined for China increased sharply during the early parts of the year, but while a seasonal weakness followed, a rebound has been seen in recent weeks, and aggregate volumes for June could be on track to approach 2m tonnes, the highest since February, he said.

“Hence, actual volumes of Australian grains and oilseeds discharged in Chinese ports will likely rise in the coming months.”

China has been increasing wheat imports in recent years reaching about 10m tonnes in 2022 from 3.5m tonnes in 2019. 

In the first five months of this year, China’s imports reached almost 7.2m tonnes, 62.5% higher than the same period in 2022.

Local experts said the import increase is mostly seen as supplementary, and will not have a significant impact on domestic food security.

More than 80% of China’s wheat imports arrived from the US, Canada and Australia, customs data showed.

Canadian wheat to China jumped 83% from July 2022 to February 2023 versus the year-earlier period, according to shipbroker BRS, supporting demand for bulk carriers while at the same time adding to tonne-miles given the longer distance involved versus Australia.

The USDA estimates global wheat trade growth of 3.4% in the 2022/23 season to 212.5m tonnes.

Russia is the biggest exporter, followed by the European Union, Canada and Australia.

Concerns about Russian and Ukrainian export supply have come to the fore given the attempted coup in Russia during the weekend, which has led to higher wheat prices. 

The continuation of the Black Sea Grain Initiative beyond mid-July has also been called into question, with Russia threatening to abandon the deal brokered by the United nations and Türkiye in July in the past year.