Wheat king Russia is missing out on China’s buying spree

Despite ramping up wheat purchases from around the globe, China remains one of the few main markets that Russia is struggling to crack.

China’s imports are expected to climb to a seven-year high this season—almost doubling in just two years—as the country tries to secure food supplies amid a recovery in the domestic economy following coronavirus lockdowns. While that’s good news for shippers like France and Australia, Russia can only supply small amounts, mainly because China bans most Russian wheat over fungus concerns.

Still, the two nations have forged closer agricultural ties in recent years and Russia’s agricultural agency said it’s pushing China to allow imports from the country’s major growing areas, rather than just some eastern regions. That would potentially allow Russia to grab a bigger share of the global wheat market and intensify competition with rival shippers.

“If Russia comes there in earnest, competition will toughen,” said Andrey Sizov Jr., managing director at consultant SovEcon in Moscow. “Supplies will increase if the list of authorized regions is expanded.”

Russia sells wheat to more than 100 countries thanks to bumper harvests that yield attractive supplies, and is set to reclaim its position as the top shipper this season. Still, some markets like China and Algeria have remained elusive because Russian wheat hasn’t met their specifications. Russia only exports from several eastern areas to China because of concerns about the dwarf bunt fungus in other parts of the country.

For now, Russia’s efforts to get China to accept more of its supplies have been hurt by the coronavirus crisis, according to the government’s agricultural agency, Rosselkhoznadzor.

“The Chinese counterparts authorize a region only after an inspection, which has been impossible to implement amid the pandemic,” said Yulia Melano, a representative for the agency.

Also, some Russian supplies don’t meet the requirements of China’s flour mills and the quality is unstable, said Ma Wenfeng, an analyst with Beijing Orient Agribusiness Consultant Co. Ltd.

Products bound for China undergo strict quality control and always meet China’s requirements, Melano said.

China’s wheat imports are forecast to climb 12% to 6 million tons in the 2020-21 season, according to the U.S. Department of Agriculture. Last season, France, Canada and Australia were the biggest suppliers to the country, China’s customs data show.

France will continue to benefit from China’s demand, consultant Agritel has said, while the U.S. is also looking to increase sales there.