• Directory of Taiwan

China spends big on Australian wheat despite trade war

Drought and need to feed pigs may be behind Beijing’s purchase of Australian wheat

Wheat is harvested in a field. (AP Photo/Charlie Riedel, File)

Wheat is harvested in a field. (AP Photo/Charlie Riedel, File)

TAIPEI (Taiwan News) — China is buying up cargoes of Australian wheat despite tensions between the two countries over trade, after Northern Hemisphere producers were hit by adverse weather and drought.

Australia, the second largest country in the Southern Hemisphere, is on the other hand enjoying a second consecutive wheat harvest with a higher than average output, according to a Reuters report.

China and Australia have been at loggerheads over trade in recent years. China — the world's biggest importer of agricultural products — imposed duties on Australian wine and barley and drastically cut purchases of Australian coal and beef during the disputes. Yet Beijing’s appetite for wheat has become insatiable even as prices hover near eight-year highs.

"It is all about availability of good quality wheat supplies at the right price when it comes to food security for China, or any other country," said Phin Ziebell, economist at National Australia Bank. "Of course, there is posturing over the trade dispute, but food supplies are key."

Wheat is Australia’s major winter crop. Western Australia, the largest of the country’s states, generates about half of all of Australia's total wheat and ships more than 95% to overseas markets, according to the country’s Department of Agriculture.

Apart from China, the country’s main export markets include Indonesia, Japan, South Korea, Malaysia, Vietnam and Sudan, per the Department. The sun is shining on Australian wheat this year, as export restrictions together with adverse weather conditions have pushed Russian wheat prices to more than six-year highs, according to S&P Global.

China is going on a spending spree for grains, as it replenishes state reserves and tries to rebuild its pig herds after a recent outbreak of African swine fever ripped through its pig population, per S&P.