%Wheat prices are declining after China canceled several major orders of the grain as the Asian nation tries to secure better prices and seeks to bolster its domestic food security.
Wheat futures are currently trading at about $5.50 U.S. per bushel on the Chicago Mercantile Exchange, down 10% from the start of this year.
The U.S. Department of Agriculture last month said that 504,000 tonnes of wheat sales to China had been canceled.
That figure is equivalent to half the total U.S. wheat shipments to China in 2022 and the largest cancellation on record.
Now, China has also canceled one million tonnes of Australian wheat orders, according to media reports.
China is the world’s largest grain importer and its purchases send wheat prices higher and lower.
While Chinese authorities have yet to provide a reason for the cancelled wheat orders, analysts speculate that the country is trying to drive prices down and also aiming to boost its own domestic agriculture industry.
Demand for wheat imports had spiked in China last summer after the country’s main wheat-growing province Henan was hit with heavy flooding.
In response, China secured large-scale contracts for high-quality wheat from Australia, Canada and the U.S.
However, those orders are now being canceled and China is buying more wheat from Kazakhstan and other places.
At the same time, Russia, the world’s largest exporter of wheat, has ramped up its cheap shipments of wheat, further pressuring prices.
The Chinese government has focused more on food security over the last year amid surging prices and escalating tensions with the U.S.
A food security law is set to take effect in China this June to help bolster domestic production of various grains, including wheat.
Global wheat prices are now about 30% lower than where they were in July 2023.