June 13, 2012

 

China's wheat imports may rise over twofold

 

 

China is likely to more than double its wheat imports this year as local output slides due to bad weather and disease, analysts said.

 

China imported 1.25 million tonnes of wheat last year, and that figure will surge in 2012 as the country is forced replenish supplies, particularly of high-grade wheat, in the second half, they said.

 

"China has been importing a lot, and with lower production growth we expect imports will continue to grow and double those of 2011," said Li Qiang, a senior analyst with Shanghai JC Intelligence Co. Ltd (JCI).

 

Agriculture minister Han Changfu was cited by state media as saying China would reap another bumper wheat harvest this year, but some predict yields could fall from last year as heavy rain and high temperatures help diseases to spread.

 

"The adverse weather has damaged the quality of wheat, which would spur demand for imports of high-quality wheat from countries like the United States and Canada," said one analyst with an official think-tank.

 

Imports in the first four months surged 442% to 1.41 million tonnes, already topping the total for the whole of 2011, driven largely by cheap overseas prices. Most of the imports were low-grade wheat from Australia used as feed for farms.

 

China has large stockpiles of wheat but they have fallen 44% to about 30 million tonnes over the past year, largely because feed mills have been using cheap wheat as a substitute for corn, according to JCI.

 

CBOT wheat prices have risen 5% over the past month, supported by dry weather concerns in parts of the US, the largest exporter of the grain.

 

Dry weather in key US growing areas during May took the top off of this year's winter wheat harvest and could prompt the government to cut its production forecast by 3.2%, according to a Reuters poll.

 

Consultancy Beijing Oriental Agri-business Consultant Co. Ltd. (BOABC) predicts the country's 2012 winter wheat yield will fall 1.63% from last year to 109.95 million tonnes.

 

The agriculture ministry said outbreaks of wheat scab had hurt 4.66 million hectares of winter wheat, or nearly 20% of the country's total wheat acreage. The affected area was 40% higher than normal years, the ministry said.

 

The grain harvested from wheat fields infested with scab is of poor quality and low test weight, and often contains toxins produced by fungi that make grain less palatable to livestock and humans.

 

Besides scab, common root rot, a disease caused by fungi, is also widespread among wheat in northern growing areas, said JCI's Li, who visited some of the major wheat growing areas.

 

He predicted that output was unlikely to fall, but growth was likely to be only half the earlier prediction of 11 million tonnes.

 

Official think-tank the China National Grain and Oils Information Centre (CNGOIC) said production could be one million to 1.5 million tonnes lower than its earlier estimate of 114 million tonnes of winter wheat, but the figure was still slightly higher than the 111 million tonnes for last year.

 

Some industry analysts said feed mills could switch to corn if wheat prices rise significantly.