China’s Wheat Prices Hit Record High Despite Bumper Crop

Wheat prices in China jumped to a record high despite the summer’s bumper harvest as wheat farmers wait for higher prices while pandemic control has hindered logistics, resulting in a limited supply.

After summer, the price of one jin or half a kilogram of wheat rose by CNY0.2 to a new high of CNY1.65 (up by US 3 cents to US 20 cents) in most regions from previous years, Wang Han, a wheat farmer in Anhui province, said to Yicai Global. Summer grain harvest usually ends in June or July.

However, the yield rose above the usual as one mu of land (0.7 hectares) generated over 50 kg more harvest, Wang added.

The situation defies the expected market dynamics as prices surged despite stable demand and added output. This is mostly caused by a tighter short-term supply of wheat, Cao Hui, analyst at the Ministry of Agriculture and Rural Affairs, said to Yicai Global.

Demand tends to pick up at this time of year as flour mills usually acquire more wheat as temperatures drop, but many Chinese farmers remained relatively reluctant to sell wheat as they expect to receive a higher price later, Cao said. Moreover, supply is lower than demand since farmers are now busy with autumn harvest and planting while Covid-19 restrictions affect regional logistics.

Moreover, feed processors have had to seek alternatives to corn in the past two years amid skyrocketing corn prices, as a large amount of wheat has been used for fodder, Lin explained.

The consequences of the Russia-Ukraine conflict have also affected price expectations in the Chinese market to some extent in the short term.

Still, international price swings are not likely to have a significant impact on the domestic wheat market, Lin Guofa, research director at Bric’s agriproduct bulk trade platform, told Yicai Global. Since 2000, there have been three global rounds of wheat price surges, but none of them had such a big effect on China, Lin added.

Imports are only a drop in the bucket compared to domestic output. Last year, China imported 9.7 million tons of wheat, accounting for 7 percent of the domestic total, according to customs data.

Tags: record high, China, bumper harvest, prices, wheat, Market