Exclusive-China Buys Canadian, Australian Wheat as Heat hits Crop, Traders say

Commodity

China–U.S. Trade War

Summary:

China is the world's top wheat grower and also imports large amounts of grain when domestic supply falls short of demand.

Chinese buyers bought between 400,000 and 500,000 metric tons of wheat from Australia and Canada in recent weeks, traders said, as heat threatens to damage crops in China’s agricultural heartlands.

China is the world's top wheat grower and also imports large amounts of grain when domestic supply falls short of demand.

Earlier this week, Henan province, which grows about a third of China's crop, issued a risk warning as hot, dry weather threatened the wheat growing in its fields.

Chinese buyers have purchased four or five 55,000-ton shipments of wheat from Australia for delivery in July or August and around 200,000 tons from Canada, sources at two major trading firms in Australia said. The wheat is of milling quality.

The bookings from Australia were the first made by China from the country since last year, said one of the traders.

COFCO, the state-owned Chinese firm that handles most of the country's wheat imports, did not immediately respond to a request for comment.

China has in recent years been one of the world's biggest wheat importers, buying in around 11 million tons worth $3.5 billion in 2024. Australia and Canada are typically its biggest suppliers.

But shipments slowed sharply after China reaped large wheat and corn harvests last year and have since remained low.

China delayed or redirected shipments from Australia earlier this year and imported less than a million tons of wheat in the seven months to March 31, Chinese customs data accessed through Trade Data Monitor show.

One of the sources said their company had lowered its forecast of Chinese 2025 wheat production by around 5 million tons but there was no guarantee that more purchases would follow because China has large wheat inventories.

"China is well self-sufficient in feed grains this crop year with heavy stocks," said Rod Baker, an analyst at Australian Crop Forecasters in Perth, adding that faltering economic growth in China was also depressing demand for grains.

Talk of Canadian wheat sales to China has echoed around agricultural business circles in Winnipeg, Canada's grain industry capital, according to traders. Few concrete details on the sales have emerged.

Chinese buyers would have avoided buying U.S. wheat due to tariffs and the trade war between Washington and Beijing, one trader said. China in the past has been a top destination for U.S. wheat sales.

The drop-off in Chinese imports earlier in the current 2024/25 season had contributed to subdued international wheat prices, with benchmark futures in Chicago still near a four-year low touched last July.

Along with weather risks to China's upcoming harvest, attractive prices may have lured Chinese importers back into the market as the 2025/26 season approaches, traders said.

BARLEY

Chinese importers also booked a large amount of barley, according to traders.

Some said that six panamax bulk carriers carrying around 360,000 tons of French or Ukrainian new-crop barley had been sold for delivery in July or August, with others putting the volume much higher at around 1 million tons, also for shipment this summer.

"Chinese wheat and barley import buying has been very quiet in the past year and these are the first major deals I have seen in many months," a German trader said.

Feed barley purchases with optional origin were from Ukraine or France. The deals were done at a price of around $250-$254 a tonne delivered to China, one trader said.

Source: Reuters

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Manuel

Economic

China–U.S. Trade War

President Donald Trump said on Friday an 80% tariff on Chinese goods "seems right," suggesting for the first time a specific alternative to the 145% levies he has imposed on Chinese imports ahead of closely watched weekend talks between the two countries.

U.S. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet Chinese economic tsar He Lifeng in Switzerland to discuss containing a trade war between the world's two biggest economies.

It could be the first step toward resolving a damaging conflict that has already entangled global supply chains.

Asked how the president arrived at the 80% figure, White House spokeswoman Karoline Leavitt said, "That was a number the president threw out there, and we'll see what happens this weekend."

Trump will not unilaterally bring down tariffs on China, however, she stressed.

"We need to see concessions from them as well," she said.

China is also sending a top public-security official to the talks in Geneva, a source familiar with the plans said. The development, first reported by the Wall Street Journal, is an indication of the importance of the issue of fentanyl trafficking to the talks and the wider U.S.-China relationship.

Trump cited the fentanyl scourge as the rationale for the initial imposition of punitive import taxes on goods from China, Canada and Mexico earlier this year.

China's embassy in Washington did not respond to a request for comment.

"China should open up its market to USA – would be so good for them!!! Closed markets don't work anymore!!!" Trump wrote in an all-caps social media post, opens new tab. "80% tariff on China seems right. Up to Scott B.," he added moments later.

China's foreign ministry has decried what it calls abusive and bullying economic tactics and said that China remains firmly opposed to what it calls an unsustainable approach to trade by the U.S.

Ryan Majerus, partner with the King & Spalding law firm and a former senior Commerce Department official, said the expected decline in port and trade traffic may have created some pressure to start addressing the U.S.-China trade impasse in Geneva.

"I don't see an easy off-ramp for either party," he said. "We could see a more limited agreement that lowers the tariff rates to a degree, depending on what China is willing to do."

The weekend talks come on the heels of Trump's first agreement with a major trading partner: Thursday's announcement of a pact with Britain. While that fueled some optimism in markets, it was fairly limited in scope, and a range of details still need to be hammered out.

"The U.S.-U.K. trade agreement may be better than nothing, but it is not significant enough to warrant a change to our forecast," Nancy Vanden Houten, lead U.S. economist at Oxford Economics, wrote on Friday. "While talks this weekend between U.S. and Chinese officials may yield some progress, expectations for a significant reduction in tariffs seem unwarranted."

Oxford estimates that lowering tariffs on China to 80% would bring the overall effective import tax rate from all the tariffs imposed by Trump so far to 18% from around 22% now. That would still be three times what Oxford had estimated at the start of Trump's term and far above the 2-3% average from before he returned to office.

US STOCKS MUTED

While Trump has indicated on several occasions that he expects the punitive tariff rates on China to come down, he had not until now floated a precise alternative.

Even though 80% is just around half the current rate, it remains extraordinarily high, above even the hefty 60% rate that Trump proposed while campaigning for president last year. It was not clear how it would be received by China amid what Bessent has already cast as an effective trade embargo between the two countries.

What level tariff rates settle at – and not just for China – has been a central focus for investors rattled by months of financial market volatility arising from the chaotic rollout of Trump's aggressive trade policies.

U.S. stocks, which have recouped a significant chunk of their losses since mid-February's record high, finished slightly lower for the week after a quiet session on Friday. The dollar was weaker against a basket of major trading partners' currencies.

Since taking office in January, Trump has hiked the tariffs paid by U.S. importers for goods from China to 145%, in addition to those he imposed on many Chinese goods during his first term and the duties levied by the Biden administration.

China hit back by imposing export curbs on some rare earth elements, vital for U.S. manufacturers of weapons and electronic consumer goods, and raising tariffs on U.S. goods to 125%. It also imposed extra levies on some products including soybeans and liquefied natural gas.

Trump's push on tariffs is widely seen to be elevating risks to the U.S. economy, with concerns that they will lift prices for American consumers and businesses while at the same time cutting into the demand that has so far propped up the job market.

Trump is already facing dropping approval ratings over his handling of trade as Americans brace to pay more for clothes, electronics, toys and countless other goods that emerge from Chinese factories.

China's government is seeking to mitigate closures, bankruptcies and job losses at manufacturers struggling to find viable alternatives to the U.S. market.

Representing the meeting's host, Swiss Vice President Guy Parmelin, who also serves as economic minister, emerged from separate bilateral meetings in Geneva with the U.S. and Chinese delegations with optimistic words for reporters.

"It's already a success," Parmelin said. "The two sides are talking ... If a road map can emerge and they decide to continue discussions, that will lower the tensions."

Source: Reuters

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Manuel

Political

Commodity

Iran has agreed to hold a fourth round of nuclear talks with the United States on Sunday in Oman, Foreign Minister Abbas Araqchi said on Friday, adding that the negotiations were advancing.

U.S. President Donald Trump, who withdrew Washington from a 2015 deal between Tehran and world powers meant to curb its nuclear activity, has threatened to bomb Iran if no new deal is reached to resolve the long unresolved dispute.

Trump's special envoy, Steve Witkoff, plans to attend the talks in Oman, a source familiar with the matter said on Friday.

Western countries say Iran's nuclear programme, which Tehran accelerated after the U.S. walkout from the now moribund 2015 accord, is geared toward producing weapons, whereas Iran insists it is purely for civilian purposes.

"The negotiations are moving forward, and naturally, the further we go, the more consultations and reviews are needed," Araqchi said in remarks carried by Iranian state media.

"The delegations require more time to examine the issues that are raised. But what is important is that we are on a forward-moving path and gradually entering into the details."

Witkoff, in an interview with Breitbart News, said the Iranians had stated that they do not want a nuclear weapon and the United States will "take them at their word" on this point.

"If that’s how they feel, then their enrichment facilities have to be dismantled. They cannot have centrifuges. They have to downblend all of their fuel that they have there and send it to a faraway place — and they have to convert to a civil program if they want to run a civil program," he said.

The fourth round of indirect negotiations, initially scheduled for May 3 in Rome, was postponed, with mediator Oman citing "logistical reasons".

In a separate statement on Friday, Omani Foreign Minister Sayyid Badr Albusaidi said that after "coordination with both Iran and the U.S.", the fourth round of negotiations was set to take place on Sunday in Muscat.

Araqchi said his planned visit to Qatar and Saudi Arabia on Saturday was in line with "continuous consultations" with neighbouring countries to "address their concerns and mutual interests" about the nuclear issue.

Source: Reuters

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Manuel

Commodity

China–U.S. Trade War

Oil rose as algorithmic traders fled short positions amid renewed optimism about trade talks between the US and China this weekend.

West Texas Intermediate climbed 1.9% to settle near $61 a barrel, the highest in over a week, as the Trump administration weighs reducing levies on China to de-escalate tensions and temper the economic pain in both countries. The rally was limited by President Donald Trump’s comments that an 80% tariff on China “seems right.”

Meanwhile, commodity trading advisers, which tend to exacerbate price swings, liquidated short positions to sit at 91% short in both WTI and Brent on Friday, compared with 100% short on May 8, according to data from Bridgeton Research Group.

Crude has tumbled from a mid-January peak on concerns the trade war will dent economic growth, while OPEC+ is reviving idled production. Measured optimism on trade negotiations has helped prices recover some ground after starting the week near the lowest since 2021. Fuel markets have also provided positive signs, with one gauge of strength in gasoline reaching the strongest in about six months.

“WTI breaking back above $60 has likely triggered short-covering from newly established positions,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “Optimism around potential progress with China is also providing support.”

Still, while Trump hailed the pact with the UK as historic, specifics of the deal indicated it fell short of the “full and comprehensive” agreement he had promised. And even though Trump said negotiations with China would result in tangible progress, Beijing reiterated on Thursday its call for the US to cancel tariffs ahead of talks.

The US, meanwhile, sanctioned a third so-called teapot refinery in China — along with port terminal operators, vessels and individuals — for allegedly facilitating the trade of Iranian crude. Hebei Xinhai Chemical Group was the main target of the action.

The UK also sanctioned senior executives in an oil trading network that it says has been helping key Russian oil exports flowing. The country also plans to target more than 100 oil tankers.

Source: Bloomberg

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Manuel

Cryptocurrency

Ethereum has experienced its most impressive rally in four years following the long-anticipated Pectra upgrade. This major protocol update has injected new life into the world’s second-largest cryptocurrency, reigniting investor enthusiasm and pushing ETH into a fresh upward trajectory.

The Pectra upgrade is the network’s biggest change since the Merge, enhancing staking efficiency, validator functions, and Layer 2 scalability. These technical enhancements not only bolster network performance but also reaffirm Ethereum’s commitment to overcoming past challenges and setting the stage for its next growth chapter.

ETH PRICE REPORT

After the upgrade was activated, Ethereum’s price jumped by 16%, showing a strong increase that indicates renewed confidence in the market. At the time of the rally, ETH’s price soared from earlier levels of around $1,900 to push above the $2,300 mark, increasing nearly 20% and setting off a wave of excitement across trading platforms.

Data from leading market trackers now reflects a fresh trading sentiment, with investors rushing to position themselves ahead of further gains. The boost in ETH’s price, driven by the technical revival from the upgrade, also indicates a broader shift in risk-on sentiment, as market participants see Ethereum as a key indicator of digital asset resilience in uncertain times.

LOOKING AHEAD: BROADER CRYPTO IMPLICATIONS

The Pectra upgrade not only marks a milestone for Ethereum but also carries major implications for the entire crypto ecosystem. With enhanced staking and smoother validator operations, Ethereum is now better positioned to support a new generation of decentralized applications and smart contracts.

This significant price rally, the most substantial in nearly four years, is fostering optimism about potential investments and innovative solutions emerging from the network. Industry experts now suggest that as Ethereum’s technological capabilities improve, it could lead to a revitalized wave of developments, attracting additional inflows from both retail and institutional investors.

As traders and enthusiasts continue to follow the unfolding story, the latest surge offers a glimpse into Ethereum’s transformative potential. All eyes remain on the network as it leverages heightened confidence and technical prowess to lead the crypto market into its next phase of growth.

Source: CryptoEconomy

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Bond

Economic

The cost of insuring exposure to U.S. government debt has climbed noticeably over the past month and remains stubbornly high, as jittery investors brace for a looming U.S. borrowing-limit political debate as well as overall policy uncertainty.

Spreads on U.S. credit default swaps (CDS) - market-based gauges of the risk of a sovereign default - widened to their highest since the debt ceiling crisis of 2023 in recent weeks. The size of the market and trading volumes have also increased recently, Barclays said in a note this week, in a sign that a product generally considered to be niche is garnering more investor attention.

While years ago buying protection for a U.S. default was an unpopular trade, things have changed recently because of policy uncertainty in Washington, said Greg Peters, co-chief investment officer of PGIM Fixed Income. "Now, with the debt ceiling and everything else going on, no one wants to be short that option," he said.

U.S. sovereign CDS spreads have increased not just for short-dated maturities but across the curve, with one-year and five-year spreads at their highest since May 2023, when the U.S. was on the verge of a default because of political brinkmanship over the debt ceiling.

On Friday, those spreads stood at 60 basis points and 56 basis points, respectively - a touch lower than in recent weeks but still significantly higher than in March, S&P Global Market Intelligence data showed.

The rise in the protection costs has gained momentum after April 2, when U.S. President Donald Trump announced sweeping tariffs, which in the following days sparked a sharp selloff in the Treasury market, the bedrock of the global financial system.

"What you've seen since April 2 is a real rise in that risk premium," said Peters.

After days of heavy selling, Treasuries rallied after Trump announced a 90-day tariff pause for most U.S. trading partners, a move likely prompted by the tariff-fueled selloff. Benchmark 10-year yields were last at 4.36%, about 20 basis points lower than the high they touched on April 11, the day tariffs were paused.

Still, another key measure of risk embedded in Treasury bonds, which captures the premium investors charge for policy uncertainty, has remained elevated in recent weeks, according to New York Fed data.

The U.S. government reached its statutory borrowing limit in January and began employing "extraordinary measures" to keep it from breaching the cap and risking a potential default.

Barclays analysts said in a note this week the so-called X-date, when the government will no longer be able to pay all its obligations, will likely fall in late August or early September, but that an economic slowdown could put pressure on the Treasury's cash position and pull that date forward.

Treasury Secretary Scott Bessent said earlier this week that the department was "at the warning track" in terms of exhausting remaining borrowing capacity under the federal debt ceiling, but vowed that the government would not default on its obligations.

Investors held about $3.9 billion worth of active credit insurance contracts on U.S. government debt as of May 2, Barclays said, citing data from the Depository Trust and Clearing Corporation, a financial market infrastructure company, up from $2.9 billion at the beginning of the year.

Over the past three months, credit insurance on U.S. government debt has been the 12th most-traded single-name CDS contract globally, with weekly trading averaging over $625 million, said Barclays.

Source: Reuters

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Damon

Political

The explosions in Amritsar - the first heard in the three-day-old conflict between the nuclear-armed neighbours - could mark a further expansion in the hostilities that have alarmed world powers.

Projectiles and flashes were seen in the night sky above the Indian Kashmir city of Jammu that was plunged into a blackout in the second night of blasts in the region's winter capital, officials and a Reuters journalist said.

"Drones have been sighted ... They are being engaged," said an Indian military official who asked not to be named.

Ten blasts were heard near the airport in the Indian Kashmir city of Srinagar and there were explosions in a dozen other locations in the contested region, other security officials added.

There was no immediate comment from Pakistan which dismissed Indian accusations that it had launched attacks on the same area on Thursday night.

The old foes have been clashing since India struck several areas that it described as "terrorist infrastructure" in Pakistan on Wednesday in retaliation for a deadly attack on Hindu tourists in Indian Kashmir last month.

Pakistan dismissed Indian accusations that it was involved. Both countries have exchanged cross-border fire and shelling and sent drones and missiles into each other's airspace.

Around 48 people have been killed since Wednesday, according to casualty estimates on both sides of the border that have not been independently verified.

Tourists and villagers fled border zones, residents rushed to stockpile food and people were told to stay indoors in cities in Kashmir and beyond. India's cricket board on Friday suspended the IPL - the sport's richest tournament - and the Pakistan Super League postponed its remaining eight matches.

The relationship between India and Pakistan has been fraught with tension since they gained independence from colonial Britain in 1947. The countries have fought three wars, two of them over Kashmir, and clashed many times.

CLASHING ACCUSATIONS

Item 1 of 4 A man uses his mobile phone to film debris of shops damaged by cross-border shelling in Lagama village near the Line of Control (LoC) between India and Pakistan, in Indian Kashmir's Baramulla district, May 9, 2025. REUTERS/Stringer

[1/4]A man uses his mobile phone to film debris of shops damaged by cross-border shelling in Lagama village near the Line of Control (LoC) between India and Pakistan, in Indian Kashmir's Baramulla district, May 9, 2025. REUTERS/Stringer Purchase Licensing Rights, opens new tab

India's airforce earlier said Pakistan used Turkish drones to attack 36 locations on India's west and northwest, in Kashmir and further afield in states bordering Pakistan all the way to the edge of the Arabian Sea on Thursday night into Friday morning.

India responded with drones on targets in Pakistan and destroyed one air defence system, Indian Air Force officer Vyomika Singh told a media briefing.

Pakistan Information Minister Attaullah Tarar had dismissed earlier Indian accusations of Pakistani attacks as "baseless and misleading" and said Pakistan had not carried out any "offensive actions".

In Pakistani Kashmir, officials said heavy shelling from across the border killed five civilians, including an infant, and wounded 29 others in the early hours of Friday.

The fighting is the deadliest since a limited conflict between the two countries in Kashmir's Kargil region in 1999.

Sirens had blared for more than two hours earlier on Friday in in Amritsar, which houses the Golden Temple revered by Sikhs.

Tourists fled the city by road as the airport was closed.

"We really wanted to stay but the loud sounds, sirens, and blackouts are giving us sleepless nights. Our families back home are worried for us so we have booked a cab and are leaving," said a British national who did not want to be named.

Schools and coaching centres were closed in the Bikaner region of India's desert state of Rajasthan, and residents near the Pakistan border said they were asked to move further away and consider moving in with relatives or using accommodation arranged by the government.

Further south in Bhuj in Gujarat, authorities said tourist buses had been kept on standby in case they needed to evacuate people near the Pakistan border.

India's Directorate General of Shipping directed all ports, terminals and shipyards to increase security, amid "growing concerns regarding potential threats".

Indian shares fell for a second straight session on Friday, losing about $83 billion in market value, with both key stock indexes losing 1.1%.

Pakistan's benchmark share index (.KSE), opens new tab closed 3.52% higher with traders crediting a fall off in violence in Pakistani territory after Thursday's clashes.

Reporting by Aftab Ahmed in Jammu, Charlotte Greenfield, Gibran Naiyyar Peshimam and Asif Shahzad in Islamabad, Saurabh Sharma in Amritsar, Rupam Jain in New Delhi, Ariba Shahid in Karachi, Fayaz Bukhari in Srinagar,; Additional reporting by Nilutpal Timsina in Bengaluru; Writing by Sakshi Dayal and YP Rajesh; Editing by Jacqueline Wong, Raju Gopalakrishnan and Andrew Heavens