* China buys Australian wheat as output falls elsewhere
* Buying comes despite trade friction with Canberra
* Australian wheat crop seen near record for second year
* Chinese buying of 2021/22 Australian wheat at 2 mln T
By Naveen Thukral and Hallie Gu
SINGAPORE/BEIJING, Sept 24 (Reuters) - China is snapping up cargoes of Australian wheat despite a bitter trade standoff between the two countries, as crop downgrades elsewhere lead to a global shortfall in output.
The buying spree comes as Australia, a key global food supplier, is expecting a second consecutive bumper harvest, while Northern Hemisphere producers have been hit by adverse weather and drought.
China, the world's top importer of agricultural products, has imposed anti-dumping duties on Australian wine and barley and slashed purchases of Australian coal and beef during the long-running dispute, but is seeking out wheat as prices hover near eight-year highs.
"It is all about availability of good quality wheat supplies at the right price when it comes to food security for China, or any other country," said Phin Ziebell, an agribusiness economist at National Australia Bank in Melbourne.
"Of course, there is posturing over the trade dispute, but food supplies are key."
China has emerged as a leading buyer of Australia's upcoming wheat crop, taking close to two million tonnes out of the five million or so that farmers have sold so far from the 2021/22 (July-June) crop, which will be harvested at the year-end, three trade sources and one analyst told Reuters.
"Chinese buyers have cancelled some cargoes of French wheat on quality issues, and they are turning to Australia in a big way," said one Singapore-based trader at an international food-supply company.
Global wheat prices climbed to their highest since 2013 in August on expectations of lower output among top exporters due to adverse weather in Russia and drought in the United States and Canada.
Benchmark Chicago Board of Trade (CBOT) wheat futures were trading at $7.17-3/4 a bushel on Friday, not far from an eight-year high of $7.75 a bushel reached in August.
Quality downgrades in exporters such as France have added to supply issues for China, which has cancelled some cargoes in recent weeks, according to sources.
China is the world's biggest producer and consumer of wheat, but is still short of the quality and quantity it needs.
The nation is expected to produce 136.9 million tonnes of wheat in the year to June 2022, but consumption during the period is estimated at 149 million tonnes, according to the latest U.S. Department of Agriculture forecast.
"We are indeed expecting a bumper Australian wheat harvest and China will definitely import as Aussie wheat seems like the only better choice globally," said a Beijing-based trader with an international trading house, adding that French wheat this year is "basically doomed" due to quality issues.
Australian forecasters last week upgraded wheat production targets to 32.6 million tonnes for the season ending June 30, 2022, which would make it second only to last season's record-breaking harvest of the country's most valuable crop.
The bumper supply outlook represents a remarkable turnaround from three years of crippling drought in Australia that subsided only early last year.
(Reporting by Naveen Thukral; Editing by Gavin Maguire and Richard Pullin)
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