The Canadian Wheat Board has said it will more than double wheat sales to China as poor weather downgrades the Asian country’s domestic crop.
The sale of 500,000 metric tonnes by the end of 2011 to COFCO, China's largest government food processor, will be worth C$130 million (US$123 million).
The agreement, mainly for high-quality spring wheat used in baking, partly reflects poor growing conditions for China's domestic crop, including drought in the south and cool temperatures in the north. The poor growing weather will likely keep China's wheat from reaching its best quality and yield.
China, with a growing population of 1.3 billion people, is the world's number one producer and consumer of agriculture products. It is also Canada's third-largest trading partner after the US and the European Union, with two-way trade of over $50 billion, including $3.1 billion in agriculture and food.
China bought nearly 2.3 million tonnes of Canadian wheat in 2004-05 but only 37,000 tonnes in 2008-09, according to data from the Board. The Asian country is the world's number two wheat producer after the European Union, usually getting most of its imported wheat from Australia and the US.
China bought 200,000 tonnes of Canadian wheat, durum and wheat flour from August 2009 through April 2010.
During 50 years of wheat shipments to China, the Asian country has imported more than 120 million tonnes of western Canadian wheat and barley—enough to make 279 billion loaves of bread and 55 billion bottles of beer.
The Wheat Board is one of the world's largest grain marketers, and holds a government-granted monopoly on sales of Western Canada's wheat and barley. It sells the grain of 75,000 growers to more than 70 countries and returns all revenue, less marketing costs, to the farmers.
It has operated a branch office in Beijing since 1994—one of only two Wheat Board offices outside Canada.
Canada has not had ideal growing conditions this spring either, with wet weather leaving the biggest unplanted acreage in 39 years. But it is understood that the Wheat Board will not have trouble finding enough supply for China unless the weather gets even worse.
