Analysts have tipped that China could surpass Indonesia as the biggest buyer of Australian wheat within a year, according to the Australian Financial Review.
This is important, as there is cheaper wheat in markets further afield, and Australia needs other sectors of its economy to get a boost as the mining boom winds down.
In the article, chief analyst at Profarmer Australia, Nathan Cattle, said Chinese demand will be especially important for Australian farmers next season.
“Australian wheat is struggling to compete on price into the Middle East and North African markets as supply is increasing from the Black Sea area,” he said. “So the Chinese buying is a very significant development.”
Brett Cooper, the senior markets manager at commodities trader FCStone, predicts in the article that Australia could sell more than 4 million tonnes of wheat to China in the next season.
Demand is being driven by a growing middle class in the world’s second largest economy, as well as droughts and floods in parts of the country.
Meanwhile, recently the United States Department of Agriculture upgraded its forecast of Chinese wheat imports to 9.5 million tonnes in 2013-14.
According to the article, that’s almost triple the number from the previous financial year.