Reduced demand from major importers will put pressure on wheat prices in the near future

China's economic slowdown and increased domestic grain production continue to restrain wheat purchases on the global market, which increases pressure on prices, despite the fact that global stocks are approaching a 9-year low.

China, the largest wheat importer, is expected to cut its imports by half in the first six months of 2025 compared to the previous year. At the same time, demand in Indonesia will decrease due to the recovery of rice production, and Egypt, the third largest wheat importer, will reduce purchases due to the worsening financial situation in the country.

According to the China National Grain and Oil Information Center, in the 2024/25 MY, the country may reduce wheat imports by 37% (compared to the previous season) to 8 million tons, which would be significantly lower than the USDA's January forecast of 10.5 million tons and the 13.6 million tons imported in the 2023/24 MY.

Reuters reports that China has postponed imports of up to 600,000 tons of wheat, which were to be delivered in January-February, mainly from Australia and Canada, and now COFCO is looking for new buyers for this wheat in Southeast Asia.

A good harvest of corn and wheat has allowed China to build up significant grain reserves. And to support domestic prices, which have fallen due to a grain surplus, the country does not plan to receive new wheat shipments until April.

The company that imported most of the delayed or redirected shipments covers the costs of storing the grain in ports and possible financial losses from its resale, so sellers will not suffer losses, but demand from other buyers will decrease.

A reduction in consumption in China will negatively impact Australian farmers, who have just completed a near-record harvest and have been heavily dependent on Chinese demand in recent years.

Egypt's new state grain procurement operator, Mostakbal Misr, purchased 1.267 million tons of wheat in late December and said it would last until June. The Egyptian government is continuing a program to reduce state wheat purchases and increase imports by private companies.

Tomorrow, the USDA will update its global wheat balance, which could raise the Australian harvest forecast. In addition, if import and consumption forecasts in China and other countries are lowered, ending wheat stocks could rise, which would put more pressure on quotes.