Global demand for wheat imports declined due to local production and economic problems

Global wheat imports are likely to decline this year as slowing economic growth among major buyers, a stronger US dollar and rising local grain production curb purchases, putting pressure on prices, despite global stocks approaching a nine-year low.

Slower purchases by major importers may limit grain prices, offsetting concerns that unfavorable weather conditions in the Black Sea region, the world’s largest export region, India and the United States will reduce production. Meanwhile, the decline in Chinese consumption will hit Australian farmers, who have just finished harvesting a near-record crop and have come to rely on Chinese demand in recent years.

The largest importer, China, is expected to buy less than half of last year’s volume in the first six months of 2025, while demand growth is likely to slow in Indonesia, the world’s second largest wheat buyer, and Egypt, the third largest buyer, millers and traders say.

According to traders and analysts, a higher wheat harvest in China and a recovery in rice production in Indonesia will limit supplies to that country, while a larger harvest in Iraq will keep one of the largest buyers in the Middle East from spending extra money on imports.

“One of the structural market factors that could dampen demand in the long run is rising production in key import markets such as China,” said Dennis Woznesenski, an analyst at Commonwealth Bank in Sydney.

According to the estimates of the U.S. Department of Agriculture on January 22, it is expected that wheat production in China in 2025 will increase by 2.6% compared to the previous period.

The USDA also said that imports during this period could be reduced by 37% compared to last year, to 8 million metric tons, citing data from the National Grain and Oil Information Center of China.

“The unstable geopolitical environment we are currently in, including real wars and trade wars, is prompting importing countries to increase domestic production to reduce their dependence on global supply chains,” Voznesensky said.

The decline in imports is expected to occur amid a decline in global stocks: The USDA expects stocks to fall to their lowest level in nine years by the end of June.

Wheat consumption may also decline in major buyers due to lower growth rates: China’s economy is expected to slow in 2025, while Indonesia’s growth is stagnant and Egypt’s GDP in 2023/24 grew less than a year earlier.

The cost of wheat imports from abroad increased or remained unchanged, despite the fact that in 2024 world prices reached a four-year low, as the currencies of many emerging markets declined against the dollar.

The Chinese yuan weakened due to the US-China trade dispute. The Indonesian rupiah, the Egyptian pound, are close to historic lows against the US dollar.

CHINESE DELAYS

China has recently delayed imports of up to 600,000 tons, with traders expecting purchases to decline in the coming months.

Deryn Friedrichs, co-founder of Shanghai-based Sitonia Consulting, is optimistic about demand for Chinese wheat over the next six months, adding: “The 2024 harvest (in China) was almost perfect weather, production broke records and the quality was very good. There is no great need for imports.”

Chinese importers have booked about 1 million tons for delivery in March, which is “less than in previous years when sales have doubled or tripled over the same period,” says Rod Baker, an analyst at Australian Crop Forecasters.

Competing Asian importers are also cutting back on purchases.

Indonesia’s rice production is set to rebound this year after El Niño weather conditions killed last year’s crop. The government predicts that production will increase to 32.8 million tons from 30.62 million tons in 2024.

This is helping food processors return to using locally produced rice flour from imported wheat.

According to a senior official of the Indonesian Wheat Flour Producers Association, who asked to remain anonymous because he was not authorized to speak to the media, the weak rupiah is also holding back wheat purchases.

“Purchasing power has dropped because of the strong dollar,” he said.

Egyptian wheat purchases are likely to decline this year. The state grain buyer Mostakbal Misr purchased 1.267 million tons at the end of December, which it said at the time was enough for the country until June. However, in January it purchased about 250 thousand tons more.

Egypt’s previous state procurement agency, the General Authority for the Supply of Goods, typically purchased between 4 and 5 million tons per year.

According to trade data reviewed by Reuters, in 2024, Egypt imported

Translated with DeepL.com (free version)

Tags: wheat, imports