Finance China puts Australia on notice over wheat exports

China puts Australia on notice over wheat exports

Harvest time for a Western Australian wheat crop. A study has found there is potential for wheat farmers to increase production. Photo: AAP
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Australian wheat producers have been dragged into the growing political and trade tussle between Canberra and Beijing, after China warned it would put Australian exports under the microscope.

In the latest sign of souring relations between the two countries, China’s General Administration of Customs has issued a notice in the past two weeks saying it will apply “enhanced inspection” efforts on shipments of Australian wheat.

It comes at a delicate time for wheat growers, who are believed to have forward-sold more than a dozen shipments to China for December and January worth almost $250 million.

In May, Australia’s barley trade with China – once worth $1.6 billion a year – was all but destroyed after Beijing imposed crippling 80 per cent tariffs.

‘Huge concern’

Nick Carracher, chief executive of Geelong-based market analyst Lachstock Consulting, said the decision by China was worrying given the value and volume of wheat already sold.

He said the move also appeared to be political given China’s need for feed grain.

It also had echoes of Beijing’s decision to reject barley shipments sent by giant WA grain handler CBH on grounds the vessels were contaminated with “pests”, he added.

“It’s obviously going to be a huge concern to those people who have forward business in China, the implications for the vessels that haven’t unloaded yet.

“But one thing that is very clear is that China has this increased willingness to scrutineer the vessels that are coming in.

“It’s definitely a very nervous time for the guys that have got forward business on.”

According to Mr Carracher, while the Australian wheat trade with China had been smaller than the barley trade in recent years, activity had been picking up ahead of this year’s harvest.