China, the world's top agricultural importer, has canceled half a million tons of wheat from the US over the past week, adding to the record number of cancellations that have weighed on Chicago futures, according to Bloomberg.
On Monday, private exporters exited purchases of 264,000 metric tons of US soft red winter wheat to China. This is the third consecutive day with such an announcement, and cancellations total 504,000 metric tons—the most in USDA history dating back to 1999.
Early last week, speculation about China canceling US wheat orders pushed wheat futures in Chicago lower. There have been mounting concerns that Brazil and the Black Sea markets will have increased wheat production.
Rumors that China may cancel open U.S. wheat sales hovered of SRW futures, while increased production prospects in Brazil & looming Black Sea competition cast an additional pall over the wheat complex.
— Pro Farmer (@profarmer) March 6, 2024
There are rumors that #China may cancel open US #wheat sales, pushing the May Chicago wheat contract to new contract lows. pic.twitter.com/a3bbbgSxlf
— Jim McCormick (@jpmccormick3) March 6, 2024
Wheat futures dropped 6% from last Tuesday to Monday morning. However, futures quickly erased losses and surged 4% by early afternoon.
Farm Journal's Michelle Rook spoke with ag trader Kevin Duling about the cancellations. He said China "could still have more to go, and they can have another half million tons to go."
Rook asked: "Are they going to cancel the rest of what they bought from the United States, and why are they doing this - is it just because prices have gotten much cheaper?"
Duling runs through several possible factors, including China might have "overshopped" last fall.
Is China just manipulating ag markets, or have they found a buyer elsewhere?
