Miller Magazine Issue 146 February 2022

82 ARTICLE MILLER / FEBRUARY 2022 Russia is always in the press when it comes to grains. Russia was once an irrelevance when it came to grain exports; in fact, it was more important as a destination for the world's wheat. It is phenomenal how quickly they have come to dominate. Whilst in recent weeks, the focus has been on the 'will they, won't they invade Ukraine'. Russian grain hit the headlines again with a factor that will have a long term impact. Russia has gained access to China. Let's look at some of the data to see if they will steal Australian trade. Let's start with what the deal is. Putin was in Beijing for the opening of the Winter Olympics. At the same time, the two governments announced a raft of new trade deals with the focus largely on gas and grains. Previously Russian exports to China were limited due to phytosanitary concerns. This will no longer be the case with Russia able to export with fewer restric- tions. So let's delve into the numbers. WHEAT The increase in imports of wheat into China has been huge in recent years.Chart 2 shows the imports and the major partners from 2000 to 2020, using UN comtrade data. Russia due to restrictions, are barely perceptible on the chart. Australia has been a major player throughout most of the past decade, along with the usual suspects. It is important to note that Australia did little volume in 2018 and 2019 during the drought. I'll discuss this a bit more in the end summary. The Snapshot • Russia now has full access to China. • This allows the opportunity for more barley and wheat to head into China. • Chinese buyers now have access to the worlds largest wheat exporter. • This move comes at a time when China is buying huge volumes of grain. • More open doors equal more opportunities for Chinese buyers. • Russia could start to erode Australia’s market share. However, it is more likely during times of drought when we have large deficits and uncompetitive pricing. Will Russia steal Chinese wheat trade from Australia? Andrew Whitelaw Manager Thomas Elder Markets Melbourne