Market Morsel: Chinese wheat whispers

Grain | 1st June 2023 | By Andrew Whitelaw

Market Morsel

As an ag analyst, China is one of the black holes in information. There have always been issues getting independent information from the middle kingdom. There were issues a couple of years ago when analysts started going ‘missing’.

It’s not uncommon for China to have record crop after record crop. They generally seem able to pull a rabbit out of the hat and produce a big crop, regardless of the climatic conditions.

News was reported in the Chinese press overnight that heavy rainfall impacted the largest wheat-producing province (Henan).

There are estimates that up to 20mmt of wheat could be unharvestable. According to the USDA, China was on track to produce 140mmt of wheat this year (teal bar), but a drop to 120mmt would make the crop the lowest since 2011.

In recent years, China has been imported much higher volumes of wheat than in the past. In the past year, they imported 9.96mmt, and so far they have imported 6mmt in 2023. This time last year, they had only imported 3.7mmt.

So already they have a big import program on, and if their crop is in a sorry state, we could see import volume increase higher.

We have to be very careful before buying a new Landcruiser off the back of this information. We know that Chinese details are hard to verify; let’s just see how this one pans out. At least for now.

The market has not really reacted to this news/rumour.