China’s Wheat Prices Will Return to Normal This Year as Hoarding Stops, Market Insiders Say

The price of wheat in China has fallen considerably this year and is returning to previous levels as the panic buying that took place during the Covid-19 pandemic comes to an end and demand by companies and households normalizes, market insiders said.

“This year, the price of wheat will return to a reasonable range of around CNY2.50 per kilogram. But higher quality grades could fetch up to CNY2.60 per kg,” said Wang Han, an executive in charge of an agricultural cooperative in eastern Anhui province.

So far this year, the price of wheat in China has tumbled over 18 percent to CNY2.60 (USD0.37) per kg.

The drop in prices has to do with there no longer being a need to hoard grains due to the market’s pessimistic outlook, said Zheng Wenhui, researcher of the grain-related economy at the Guangdong South China Grain Trading Center.

Supply and demand is basically the same as before, Zheng said. It is just that companies are no longer stockpiling food stuffs as they did during the Covid-19 era. Firms were hoarding up to three months of inventory during the pandemic to shield against any disruptions to supply, but this has now returned to normal levels of about one month, she said.

“The price was high last year at around CNY3 per kg. This was much higher than usual and was the result of international tensions,” Wang said.

As wheat prices rose in 2022, grain traders and processors bought more, and so the amount of wheat sold last year was much higher than in previous years, Zheng said. Now the hoarding has stopped and the price of the grain is sliding.

Households are also no longer stocking up on groceries and so demand for wheat is dropping.

And it is likely that the price of wheat will continue to fall, said Li Dazhuang, a grain trader. Flour processors are slashing inventories, demand is slumping and feed mills are also not buying much.

Traders will continue to sell off or buy more cautiously, Zheng said. But wheat prices could pick up in the third quarter.

Tags: China, price, Grains, Outlook, wheat, demand