Despite political tensions between China and Australia, wheat exports peaked in December 2020. After 3 months of no trade between the countries, wheat went from Australia to China last December.
China accounted for 33% of Australia's wheat exports in December. It is the largest monthly export order ever to 1 country, according to figures from ABS. The previous record from 2014 was 400.000 tons. Australia is thus benefiting from the shortages in China. The limited supply and higher prices of wheat in the Black Sea region are also helping Australian wheat exports.
Relationship is under pressure
The diplomatic tensions have little effect on the wheat trade. Australia earlier in 2020 (without consultation with China) pushed for an investigation into the origin of the corona virus. In response, China has imposed import duties on sugar, barley and wine, among other things. Many analysts assumed wheat would follow, but strong demand for wheat from China, tight market supply and Australia's record harvest after 3 dry years have prevented this from happening.
It is currently unclear whether sanctions will be imposed by China in the short term. For the time being, exports are still ongoing and according to the figures from S&P Global Platts, 110.000 tons have already been traded between China and Australia this month. An Australian market agency expects Australian wheat production and exports to double in the current fiscal year ending June 2021.