US grain traders are becoming less optimistic that a China trade mission's American visit, which had been supporting the US wheat market for weeks, will result in much new wheat sales, analysts said.
In fact, market talk emerged on Friday that China, a wheat exporter, might delay shipments of some old-crop wheat it had bought from the United States to the next marketing year, beginning June 1.
"The market thinks they will roll some of their old-crop positions, especially the soft red (winter wheat)," said an analyst, who declined to be identified.
China's trade delegation arrives on Tuesday and will visit Washington, Chicago and Portland, Oregon.
China has bought nearly 2 million tonnes of wheat from the United States.
US Agriculture Department data showed that 1.08 million tonnes were bought for shipment in the current marketing year, and 910,000 tonnes for 2004/05.
Of the old-crop purchases, China has shipped just 179,600 tonnes so far in the 2003/04 season ending May 31.
"Will they buy anything next week? Nobody knows. But even if they do buy something, the market has already traded on it," said one exporter, referring to recent steady gains.
He said the market was more focused on whether China would take delivery of all the old-crop it has purchased.
"If they don't lift this old crop, I bet March would be trading below $3.50," he said of the CBOT March contract, which ended on Friday at $3.80-1/4 a bushel, down 6-1/2 cents.
China signed agreements in December to buy 1 million tonnes of wheat from Australia and 500,000 tonnes from Canada.
There was talk that China had bought additional amounts from Australia, which has a freight advantage over the United States because of the shorter ocean route to China.
An analyst said one reason for China to roll over its old-crop US purchases was high freight rates. "The landed cost would be much higher than its domestic price.
China needs wheat, but it doesn't need it urgently," he added. The USDA's attache in Beijing, in a report released on Thursday, projected China's wheat ending stocks for 2004/05 at 28.877 million tonnes, down from the USDA's latest official 2003/04 projection for 41.69 million tonnes.
The report said some of the wheat China has committed to buy from Australia, Canada and the United States would enter the state grain reserve system.
Meanwhile, traders said there was talk that China bought another 200,000 to 500,000 tonnes of US wheat this week.
"There is talk they bought another half a million tonnes this week," said analyst Dan Basse, president of research firm AgResource Company.
Dawn Forsythe, spokeswoman for export promotion group US Wheat Associates, which is hosting the visitors, said she was uncertain if the Chinese would sign any purchase agreements. "We do not have a signing ceremony (in the schedule)."
She said the delegation, headed by chairman of state trading company COFCO, Zhou Mingchen, would hold meetings with USDA officials on Tuesday.
The team will travel to Chicago and Portland to meet grain company executives.
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