China stops wheat reserve auctions

While China recently had been limiting releases of wheat from its state reserves, weekly wheat auctions have been stopped earlier than last year when stocks were higher.

China suspended sales of wheat from its reserves last week and did not release any auction results April 25. This move further raised prices of the grain, which have hit record highs due to tight supplies, exacerbated by Russia’s invasion of Ukraine, two countries that account for about 29% of the world’s exports.

Beijing had been releasing only around 500,000 tonnes of wheat from the reserves in weekly auctions recently, compared with 4 million tonnes at some auctions in 2021 as Chinese feed producers snapped up the grain to offset record prices for corn. Auctions last year did not stop until May 10, and more than 27 million tonnes of wheat was sold from the reserves from the beginning of 2021 until the sale was halted before the new harvest.

Wheat prices in Shandong province, a main producer, hit record high levels at 3,380 yuan (US$515.16) per tonne last week, before edging down slightly.

The market also is watching China’s new winter wheat crop, which has improved since officials said in early March it had endured the worst crop conditions in history. The crop is grown in the central and northern parts of the country. Harvest began in the most southern regions in March and will continue through May in the north.

China is the world’s largest producer of wheat at over 136 million tonnes annually, but it also consumes about 148 million tonnes. China President Xi Jinping has made grain self-sufficiency a priority as part of the country’s most recent five-year plan.

Tags: state reserves, limiting, auctions, Ukraine, Russia, China, exports, grain, wheat, stocks