Grains –
While reviewing yesterday’s export inspections data, one thing stood out to me. Over the past several weeks/months, we’ve continued to see ongoing and consistent wheat shipments to China. The chart below shows that MYTD export shipments are the strongest we’ve seen in several years. I find this interesting considering China remains THE spot in the world where wheat stocks are expected to increase.
China updated monthly trade data overnight. Farther below I show a chart with monthly Chinese imports going back a few years. The recent import level is the strongest in several years. Why is China, the spot with the world’s largest wheat reserves, increasing its wheat imports? Admittedly these quantities aren’t enormous in the grand scheme of things, but I still find this highly interesting. The usual storyline is that Chinese wheat supplies are of poor quality and thus they need to import better quality supplies for blending. That seems reasonable and fair to me, but if their reserves are this poor that they need additional global supplies, why is the market so relieved about the total world stock level? Wheat supplies outside of China are contracting, and yet China apparently needs those supplies in addition to their massive inventories?
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