Rumour of 1 MMT Whaet sale to China

[rain]

Charlie if the CWB did sell this wheat to China, what does it mean. Will they take HRSW, CPSR Durum? What do the Chinese usually take? Do you know?

[charliep]

Haven't heard the rumor about Canada specifically although it wouldn't surprise me. Lots of talk about China buying wheat but nothing concrete. The expression where there is smoke there may be fire likely applies.

With regards to type of wheat, China mostly bought hard red spring - usually 3CWRS with an option to supply higher grades at a specific premium payment structure - sellers option to apply. This is a long time ago and to the central buying agency - COFCO if I remember right. May have changed.

CPS should apply to China as a noodle wheat but historically didn't meet the quality specifications the Aussie could provide. This may have changed with the new varieties.

Chinese (from what I know) are not pasta eaters and do not buy durum. Maybe a new market to develope.

[charliep]

An interesting question would at what price this sales occurred with an emphasis on competitive markets. Pricing in the past was based off hard red winter wheat at the Gulf as competition. With the duty on CWRS wheat headed to the US (countervail and antidumping), China likely moves up the sales ladder on a returns to pool indication.

Which raises the question as to potential price of the transaction and the contribution (positive or negative) to the current pool return outlook. Would the CWB blow out some sales to loosen up the current grid lock (read plugged elevators) in the system? Would we know?