• China becomes Australia’s third largest wheat customer
  • China purchases over 400,000T in Nov-March from Australia
  • China rebuilding run down wheat stocks (Adds detail, quotes)

By Bruce Hextall http://www.sharenet.co.za/v3/news_disp.php?id=269983

SYDNEY, March 18 (Reuters) – Chinese demand for Australian wheat has surged to levels not seen for at least five years, sucking in an estimated 400,000 tonnes of grain in the past five months, the country’s biggest grain handler said on Thursday.

The estimated exports to China between November and the end of this month would be almost double the amount it imported from Australia for the full 2008/09 marketing year, confirming a trend that official Australian data only tracks up to December so far.

“Shipping statistics reported out to the end of March indicate Australian sales into China will exceed 400,000 tonnes,” said Tom Puddy, marketing chief for the GrainPool marketing arm of CBH Group, Australia’s biggest handler of wheat exports.

Over the same period, total wheat exports from Australia, the world’s fourth largest shipper of the grain, are seen around around 5.3 million tonnes, he said quoting unpublished shipping data available to exporters.

He said China could keep buying Australian wheat throughout the marketing year ending in September.

“There could be another 300,000 tonnes of extra demand to the end of the year,” Puddy said. “It is hard to predict as it is always a mystery about what their actual stocks are.”

China is already one of the world’s largest wheat producers with production for the 2009/10 year estimated by the U.S. Department of Agriculture at 114.50 million tonnes.

Normally it imports only small quantities of the grain but the country is rebuilding stocks, buying on the international market from countries such as Australia, Canada, France, the United States and Argentina.

The purchases are made under a government import quota system that alloww about 9.6 million tonnes per annum. Each flour mill is also permitted to import 960,000 tonnes outside the quota system.

China placed orders for Australian wheat as early as last August, having missed out on securing supplies the previous season, as countries such as Iran booked large quantities pre-harvest, squeezing supplies.

Australia’s 2009/10 Australian wheat harvest, which finished in January, yielded an estimated 21.66 million tonnes, according to the government’s commodity forecaster.

China had built up wheat reserves but since 2003/04 has been auctioning off stocks, mainly Australian Standard White (ASW) type wheat, which has a reputation for quality, and soft red wheat from the United States.

“That wheat is five or six years old now..the quality has diminished a little bit so what they’re doing is replenishing stocks of current season’s white wheat,” said Puddy.