February 17, 2012

 

China drought to have less impact on wheat crop

 

 

Drought in north China's major winter wheat sowing regions will not have much impact on most of the wheat harvest after it has passed the dormant period thanks to snowfalls in the mid- and late January.

 

Meanwhile, the soil moisture conditions in the wheat planting season were good, which laid a foundation for the crop growth.

 

The country's wheat producing areas are mainly distributed in Henan, Hebei, Shandong, Shanxi, Anhui, Jiangsu, Gansu, and Shaanxi provinces, with the former three's wheat output accounting for more than a half of the national total.

 

As of Wednesday (Feb 15), droughts have affected 1.2 million hectares of farmland, mostly in west China's Gansu province, north China's Hebei province and southwest China's Yunnan province.

 

China's summer grain output, mainly including winter wheat and early rice, makes up over 20% of the full year's production.

 

A survey by an industry website www.cngrain.com shows that northern major winter wheat growing areas haven't suffered much drought since wheat planting in autumn of last year, with soil moisture appropriate and growing conditions better than last year.

 

Local traders are generally optimistic about wheat output this year, according to the survey.

 

Wheat crops in most growing regions will start to sprout in late February. The meteorological authority forecasts that significant rainfalls are unlikely to fall in major wheat areas in the middle of this month. After turning green, wheat will have rising demand for water. Irrigation will be needed if efficient rains fail to come.

 

The Ministry of Agriculture said earlier that lower-than-normal temperatures and drought might have a negative impact on spring planting.

 

China sows early rice in early April and corn in May. Northeast China is the country's major corn production base, while rice is mainly grown in south China.

 

Wheat futures traded on the Zhengzhou Commodity Exchange (ZCE) rebounded after the Spring Festival holiday mainly boosted by rally on the international markets. ZCE wheat has already slipped back recently after the robust rise.

 

Analysts predict that recovering demand on the spot market and bottom fishing will prop up wheat prices.

 

The domestic flour mills' high-quality wheat stocks have dropped significantly compared with the fourth quarter of last year, which will stimulate restocking demand and thus buoy the spot wheat trading.

 

In the meantime, wheat futures started to drop from September of last year and have accumulatively declined by nearly 20%. In the light of this, some investors may buy wheat on ZCE on price rise expectations.

 

However, industry portal www.cngrain.com forecast that the domestic wheat market would be oversupplied in crop year of 2011-12 and this would suppress rise of wheat prices.

 

The grain information provider predicted that China's wheat output would reach 117.9 million tonnes in this crop year while the consumption would amount to 112.5 million tonnes.

 

If there were no big agro-meteorological disasters in the following months, the country would continue to achieve bumper harvests of wheat, the portal projected.