China buys 450,000 tonnes of high-protein wheat

Chinese buyers purchased around 450,000 tonnes of high protein wheat over the last few days, with more imports expected due to a domestic shortage of high quality grades, traders and industry sources said. China bought around 300,000 tonnes of high protein milling wheat from Canada and about 150,000 tonnes from Australia, with shipment from May 2015, according to traders in Europe.
That follows the purchase last week of 115,000 tonnes of US hard red spring wheat.
"There is a big shortage of high-quality wheat in the domestic market. The price gap has expanded, encouraging mills and state-trading houses to import," said an industry source with an official think-tank in China.
China, the world's biggest wheat producer and consumer, has seen overall wheat output climb to record levels in recent years, but it faces a shortage of the high-protein wheat it needs to meet growing appetite for bread and other baked products as incomes rise. State-owned trading house COFCO has been allocated import quotas for more than 1.5 million tonnes, while private mills are expected to receive quotas totalling 900,000 tonnes, said traders in China. Beijing exerts control on imports using a quota system.
The latest purchase was mainly high-protein Canadian No 2 wheat, but also included Australian prime hard wheat (APH), traders in China said.
COFCO in January also bought about 120,000 tonnes of high quality hard wheat, European traders said at the time.
"COFCO and flour mills are interested in top quality wheat from these countries, where prices are much lower than current domestic prices of high-quality wheat," said one trader.
The overseas wheat price is more than 30 percent lower than domestic high-quality wheat, traders said. Domestic high-quality wheat was recently quoted at record 3,050 yuan ($492) per tonne at the port of Shenzhen in the south.
Most of China's wheat harvest last year had moderate levels of gluten, meaning it could not be used to produce western-style breads and cookies which need both high-gluten and low-gluten wheat.