Canada to Double Wheat Sales to China


By Rod Nickel

Monday, July 5, 2010

WINNIPEG Manitoba (Reuters) – The Canadian Wheat Board looks to more than double wheat sales to China, Canadian Agriculture Minister Gerry Ritz said on Monday, as poor weather downgrades China’s domestic crop.

The sale of 500,000 tons by the end of 2011 to COFCO, China’s largest government food processor, will be worth C$130 million ($123 million), Ritz said after his third trade mission to China in less than a year.

China has been a sporadic importer of Canadian wheat, buying nearly 2.3 million tons in 2004-05 but only 37,000 tons in 2008-09, according to CWB data.

The agreement, mainly for high-quality spring wheat, used in baking, partly reflects poor growing conditions for China’s domestic crop, such as drought in the south and cool temperatures in the north, said Bruce Burnett, director of weather and market analysis for the Wheat Board.

China is the world’s No. 2 wheat producer after the European Union.

“You would expect this (level of demand) from the Chinese every few years,” Burnett said. “That’s a significant increase in their imports and over our history, they have been a very valuable market for our wheat in Western Canada.”

The poor growing weather will likely keep China’s wheat from reaching its best quality and yield, but not cause a major production shortfall, he said.

Canada has had its own poor growing conditions this spring, with wet weather leaving the biggest unplanted acreage in 39 years. But the Wheat Board will not have trouble finding enough supply for China unless the weather gets even worse, Burnett said.

China usually gets most of its imported wheat from Australia and the United States, but bigger Canadian shipments won’t necessarily displace some of those sales, Burnett said.

“They’re looking for a particular spring wheat quality and we are usually the chief supplier (of that quality).”

China bought 200,000 tons of Canadian wheat, durum and wheat flour from August 2009 through April 2010.

The Wheat Board, one of the world’s largest grain marketers, holds a government-granted monopoly on sales of Western Canada’s wheat and barley.


Ritz also said China has taken the regulatory step to lift its ban on Canadian boneless beef from cattle under 30 months of age and tallow for industrial use, effective July 3. That step follows a political commitment from China taken just over a week ago, ahead of G20 meetings in Toronto on June 26-27.

“This is a vital step forward in the breakthrough agreement that will see Canada’s safe, high-quality beef back on Chinese store shelves and more (profit) back on the bottom line for producers,” Ritz said in a statement.

Canada is the world’s third-largest beef exporter and the top shipper of spring wheat and durum. China is the world’s top producer and consumer of farm products.

China said ahead of the G20 summit that it wants to double its overall trade with Canada to $60 billion by 2015.

The Minneapolis Grain Exchange and Chicago Mercantile Exchange, which trade spring wheat and live cattle futures respectively, were closed on Monday for the U.S. Independence Day holiday.

($1=$1.06 Canadian)

(Editing by Rob Wilson)

© Thomson Reuters 2010 All rights reserved.



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