December 22, 2003

China's Wheat Prices To Persist Upward Trend

Wheat prices in China are likely to maintain its upward trend. The continual rise in wheat prices is governed by five factors:

1. The domestic production continued to decrease and the demand-supply gap is enlarged.

According to a survey of 600-plus counties in 25 provinces conducted by the National Bureau of Statistics, the autumn and winter wheat sowing area decreased by 1.6% this year as compared with that of last year, a decrease for five years running. Wheat output has also decreased for four consecutive years.

2. The inventories are more rational and the supply and demand pattern is changing, providing a strong support to wheat prices.

3. As the New Year and the Spring Festival are drawing near, demand for wheat is going strong and that will push up the prices.

4. Farmers are reluctant to sell, forcing the prices up.

5. Wheat export is increasing and a net export pattern is taking shape.

According to Customs' statistics, China exported 373,516 tons of wheat in October 2003, up 387% year-on-year; and a total of 1.7169 million tons in the first 10 months, up 164%. Meanwhile, wheat import was 11,599 tons in October and 320,158 tons in the first 10 months, down 67% and 46% year-on-year respectively.