Damage from frost and rain is estimated to have destroyed as much as 20% of China’s wheat crop – an equivalent to Australia’s total annual exports. China has already booked more wheat shipments by June 2013 as the country imported in all of 2012 and estimates are that China will need 10 million tons of imports for the year – beating out the world’s number one wheat importer, Egypt, which imports 9 million tons per year. China’s soaring wheat purchases could lift global wheat prices by 10% in the coming months as farmers are reluctant to sell forward in hopes of higher prices. Wheat prices are down 15% so far this year tracking corn which has declined on forecasts of a record U.S. crop, however this spread will widen in the near future as China’s imports increase demand. The surge in wheat purchases from China will be felt most in Australia. China is expected to take 2-3 million tons of Australian wheat as opposed to the usual 500,000 tons it buys, forcing its traditional customers to seek alternative supplies.
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