May 31, 2004

China Winter Wheat Output Seen Better Than Expected
 
The closely watched winter wheat crop in China could turn out better than the industry had expected, thanks to improved yields in major producing regions, traders and analysts in China said Friday.
 
Still production this year is unlikely to exceed the output in 2003-04 (July-June) season, because the lower acreage is seen only be partly offset by the improved yield prospects.
 
The winter wheat crop, presently being harvested in China, is expected to be 80.00 million to 81.00 million metric tons, compared with 81.00 million tons last season, traders and analysts in China said Friday.
 
China state media has quoted officials saying that the grain crops harvested this summer, primarily winter wheat, could exceed the level of last season.
 
Most farmers and traders interviewed agreed that the yield outlook is better than last year and will beat early expectations.
 
"The wheat crops in Shandong are better than last year," said one wheat farmer. Other farmers in Henan and Hebei provinces also concurred that wheat crops are generally in good shape.
 
But analysts and industry officials cautioned that the total production could still be lower, despite the reports of good yields from farmers.
 
"The acreage could make the difference," said an official from a grain trading company in Beijing Friday.
 
He explained that the individual farmer is likely to report the yield outlook of his own wheat fields, but most farmers do not know the total acreage in China to calculate the production.
 
"For a farmer, if his own wheat crops are good, he will think naturally the overall outlook is good. But if we look at the total area of China, it could be another case," said another analyst from a local brokerage house in Beijing.
 
The winter wheat acreage in 2004-05 is estimated to be 19.50 million hectares, about 5% lower than the area of last season, traders said, as government policy and higher grain prices came too late for farmers to react by increasing planting late last fall.
 
The average 2004-05 wheat yield is forecast at 4.1 tons per hectare, traders said, citing a figure from a government-backed grain think tank released this week. If realized, it would be up 4% from 2003-04.
 
Still the weather in the coming two weeks could be vital to the final result of winter wheat production, analysts in China said.
 
"There were some unwelcome rains late this week and more expected this weekend in major wheat producing region in northern China," said the analyst in Beijing Friday.