China to boost wheat imports because of rain

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article

China will tap global markets for more top-quality wheat after rains during last month's harvest damaged some 10 million tonnes, over 8 percent of the annual output. Those not growing wheat probably don’t realize that China is the world's top producer of the grain.

China has already snapped up wheat from the United States and France, and more buying will drive up international prices of milling-quality grains used for making bread and cakes.

The need for more imports into China will exacerbate tight supplies for the best wheat due to crop-damaging weather in the world's top exporters of the U.S., Russia and Ukraine.

"Rains have damaged wheat quality in southern parts of Henan and also parts of the province of Jiangsu," said Ma Wenfeng, an analyst at Beijing Orient Agri-business Consultant Co. "A lot of the wheat has started to germinate and can no longer be used for milling and is only suitable for animal feed."

Henan is China's biggest wheat growing area, producing around 31 million tonnes a year, while Jiangsu's output is about 11 million tonnes. Some 10 million tonnes of wheat has been damaged in Henan and is not good enough quality to be kept in national reserves, the state think-tank, China National Grain and Oils Information, has said.

Higher imports of top-grade wheat by China would drive up premiums for protein-rich spring wheat traded on the Minneapolis Grain Exchange and hard red winter wheat on the Kansas City Board of Trade.

While Chinese flour mills will be keen to buy high-quality Canadian and U.S. spring wheat, state-run Sinograin will focus on soft red winter wheat which can be blended with domestic grains to make flour, traders said.

Analysts said the outlook for global prices is more bullish than previously thought, given the damage to crops in key producers including China.

"The market is actually longer term bullish and rightly so as it is concerned about supply prospects going forward," said Abah Ofon, a commodities analyst at Standard Chartered Bank in Singapore. "Some of the risks that are on the horizon: China's poor quality crop, problems with wheat in the U.S. and also what we are seeing in Europe right now - really wet weather."

The discovery of unapproved genetically modified wheat in a field in Oregon spooked buyers in late May, with some shunning white wheat from the U.S.

The U.S. Department of Agriculture has estimated that China will import 3.5 million tonnes of wheat in the year to June 2014, but analysts and traders said purchases could be much higher.

"Three to four million tonnes ... this is a very normal figure," said Yu Xubo, president of state-owned trading company COFCO, referring to the USDA estimate. "If there are quality issues and depending on prices, it may be higher."

China has been aggressively buying U.S. wheat, taking around 1.5 million tonnes in the last three months, according to the USDA data. That is a rise of almost 10 percent from the same period a year ago and compares to a total 3.2 million tonnes in 2012/13.

China made a rare purchase of about 200,000 tonnes of wheat from France, European traders said last week, for shipment in August, September and October.

Traders said the country is likely to buy more French soft wheat as it is cheaper than similar-quality U.S. wheat. French soft wheat is quoted around $265 a tonne, free on board, for August shipment, while similar quality U.S. wheat is being offered at $275-$280 a tonne.

Supply from the Central Asian nation of Uzbekistan, which sends wheat to China by train, is likely to be capped by limited rail capacity, industry players said, adding that imports would remain around 100,000 tonnes this year.

Chinese wheat imports started climbing in 2011/12 after being limited by ample domestic supplies since the early 1990s.

The country is struggling to maintain self-sufficiency in corn and wheat production due to stagnating production and growing domestic demand driven by rising incomes.

"China's imports of corn, soybeans and metals have been rising rapidly in past years as the country's economic growth goes on," said a European trader. "The question is if this import need has now turned to wheat."

Analysts said the country's wheat imports would be affected by global prices to some extent. "They will continue to do opportunistic buying," said one Australia-based analyst. "It doesn't seem like panic buying at this point in time."

The country has also been importing wheat to rebuild its massive but aging state reserve. China does not publish data on state stockpiles but the USDA has estimated the country's closing stocks at 58.75 million tonnes at the end of 2012/13, almost half the 120 million tonnes it consumed during the year. 

Prev 1 2 Next All

Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...

Comments (0) Leave a comment 

e-Mail (required)


characters left

Blend and Bulk Tower Systems

Waconia Towers provide speed, efficiency and reliability that only gravity-fed systems can offer. Towers are available with up to 300 ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form