context: Falling imports of rice and wheat were driven not only by domestic reforms but also by a broader shift in trade patterns favouring Belt and Road countries, particularly for wheat. Still, supply-side reforms, improved reserve management and reduced government intervention in price formation are having an impact on competitiveness. De-stocking of wheat, in particular, is expected to continue, suggesting 2019 import levels may again be low.

General Administration of Customs data shows China imported 3.08 million tonnes of rice in 2018, down 23.6 percent y-o-y, while exporting 2.14 million tonnes of rice, a 78.33 percent increase. This indicates domestic rice has grown its international market share due to price advantages, reports Yicai.

Trade data shows China imported 2.88 million tonnes of wheat in 2018, down 33.06 percent y-o-y. Wheat imported from Australia and the US declined sharply, but imports from Canada, Kazakhstan and Russia increased.

Per the report, the price gap between domestic and imported wheat shrank in 2018, accounting for most of the wheat import drop. Global wheat prices rose to $269 per tonne in 2018, up 9.53 percent y-o-y, due to restricted production capacity and China-US trade tensions.

Domestic wheat prices averaged 2,453 per tonne in 2018, down 1.05 percent y-o-y, due to

  • lower wheat minimum purchase prices
  • larger supply of high-quality wheat due to ‘quality grain project’ implementation
  • more government support during planting, processing and marketing
  • more market-based purchasing

Analysts say falling imports of wheat and rice are the intended outcome of grain production and management structure reform. Lin Guofa 林国发 BRIC Agribusiness Group research director says the lowering of minimum purchase prices of wheat and rice drove supply-side reforms, and auctions of excess reserve grain contributed to the lack of demand for imports.