China has finally showed up with a large purchase of U.S. wheat, the first step in filling their tariff rate quota for importing wheat. The commitment to purchase new crop hard red winter wheat can count toward China’s phase-one agreement for calendar year 2020.
U.S. Wheat Associates (USW) President Vince Peterson issued the following statement about the Chinese wheat import purchases.
“The USDA report that Chinese buyers have purchased 340,000 metric tons, or about 12.5 million bushels, of U.S. hard red winter (HRW) wheat for delivery in the 2020/21 marketing year is very good news for U.S. wheat farmers. This is a significant purchase volume and the largest since China implemented retaliatory tariffs on U.S. wheat in March 2018.
“This purchase falls under China’s 9.64 million metric ton tariff rate quota (TRQ). China has agreed to work toward filling its TRQ for wheat imports. As USW has noted, if the changes are in fact implemented, and Chinese millers can respond to market signals, most of the TRQ should be used. U.S. wheat farmers are in a good position to help fill the TRQ given current export prices, relatively low freight rates and the ready supply of the wheat classes China needs.
“USW appreciates the efforts of both the U.S. and Chinese governments to reach the Phase One trade agreement that has helped re-open the door to U.S. wheat imports by China. We believe that China’s flour millers and growing baking industry want the opportunity to purchase high-quality U.S. wheat classes again and we hope this is only the beginning of a new, more productive trade relationship.”
There are rumors that there could be another announcement in the coming day of wheat purchases by China of more hard red winter wheat or even hard red spring wheat. The wheat market has enjoyed a strong rally recently, as domestic millers are replenishing supplies in response to consumers buying bread, pasta and flour as they hunker down during the COVID-19 pandemic.
U.S. Wheat Associates / Northern Ag Network