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Global Trade Growth shows signs of Weakness, China cancels Wheat Shipment for US

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CEM REPORT, TRADE | The volume of world merchandise trade fell 0.4% Q-on-Q in the third quarter of 2023 and was down 2.5% Y-on-Year, according to the report just released by the World Trade Organization based on its current reading of the Goods Trade Barometer.

WTO said the steep year-on-year drop in the third quarter was mostly due to relatively strong growth in the first three quarters of 2022. Goods trade from January to October in 2023 has been mostly flat, with volume in the third quarter nearly unchanged since the start of the year and up just 3.2% over two years.

These developments are more negative than the WTO’s most recent forecast of 5 October 2023, which predicted 0.8% growth in merchandise trade in 2023.


The Goods Trade Barometer is a composite leading indicator for world trade, providing real-time information on the trajectory of merchandise trade relative to recent trends. Barometer values greater than 100 are associated with above-trend trade volumes while barometer values less than 100 suggest that goods trade has either fallen below trend or will do so in the near future.

The current reading of 100.6 for the barometer index is above the quarterly trade volume index but only slightly above the baseline value of 100 for both indices. This suggests that merchandise trade should continue to recover gradually in the early months of 2024, but any gains could be easily derailed by regional conflicts and geopolitical tensions.

Global Trade Outlook 2024

In 2024 the annual growth rate of world trade is forecast to reach 3.5% by the International Monetary Fund (IMF), 2.7% by the OECD, 3.3% by the World Trade Organization (WTO, only merchandise trade), 3.0% by the European Commission and 2.8% by the World Bank.

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Economist Intelligent Unit project global trade growth to rebound modestly in 2024, after a sharp slowdown in trade activity in 2023. The risks to this projection are high interest rates, subdued Western demand and persistent economic fragility in China–compounded by geopolitical strains and climate change factors.

Still on global trade, Private exporters reported the cancellations of sales of 264,000 metric tons of soft red winter wheat booked for delivery to China during the 2023/2024 marketing year, the U.S. Department of Agriculture (USDA) said on Monday.

According to Reuters, It was the third cancellation in as many business days and the largest of the three, following two cancellations last week totaling 240,000 tons of soft red wheat sold to China.

Wheat prices have fallen since China made a series of U.S. wheat purchases in December. The price break reflects strong competition from global suppliers, particularly Russia, the word’s biggest wheat exporter, and improved crop conditions in the U.S. winter wheat belt.

“China booked a few million tons of U.S. wheat at the end of last year when it was trying to secure tonnages,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

“But now, international prices have dropped, especially for those cargoes which are being offered from the Black Sea region. When China booked U.S. wheat, Russian wheat was around $230-$240 per ton and now the price is around $195 a ton.”

Chinese importers also made sizable purchases of French and Australian wheat last autumn after rain damaged China’s wheat crop.

In a monthly supply/demand report on Friday, the USDA cut its estimate of U.S. wheat exports in the marketing year begun June 1, 2023, to 710 million bushels, down from 725 million a month earlier and the lowest in 52 years. The 15-million-bushel reduction included 10 million bushels of soft red winter wheat exports.

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