There is a shadow emerging on the horizon as seeding wraps up on China’s 2007 wheat crop. It might be a dust cloud.
About 95 percent of Chinese wheat comes from the winter crop, seeded in the fall and harvested the following spring.
In a large part of the winter wheat region, the seeding season started off with good moisture, but then the tap turned off and the thermometer rose.
Shandong province, the country’s second-largest wheat area, had only 20 percent of normal rainfall since September.
Read Also
Increasing farmland prices blamed on investors
a major tax and financial services firm says investors are driving up the value of farmland, preventing young farmers from entering the business. Robert Andjelic said that is bullshit.
News agencies report drinking water shortages for humans and livestock. Parts of leading producer Henan and number three producer Hebei province are also in drought.
A report from the U.S. Department of Agriculture’s foreign agriculture service says the good crop this year – 103.5 million tonnes, up six percent from the year before – was due in part to changed government programs.
China’s wheat crop had been in decline from 2000 to 2003. Previously, a series of big crops had led to a large surplus that depressed prices. Crops rebounded in 2004 and 2005, but production was still less than consumption.
Through this period, stocks fell from about 103 million tonnes at the end of 1999-2000 to 35 million at the end of 2005-06.
In 2004-05, China imported 6.7 million tonnes, its first major imports since the early 1990s.
The Beijing government became worried about the tight stocks and last year instituted a policy that reduced farm taxes, provided subsidies for inputs and quality seed and instituted a minimum wheat price.
The policy remains, but acreage of the 2007 crop is expected to drop.
The China National Grain and Oils Information Centre estimated this month that the country’s winter wheat acreage was likely to fall 1.7 percent from last year to 52.78 million acres because of a shift to more rapeseed acres.
It is also possible that not all the expected acreage will be seeded because of the dry conditions. China’s official Xinhua news agency said Nov. 6 that in Shandong, plans for 8.23 million acres of winter wheat have been scaled back by the drought: 576,000 acres have not been planted and much of the planted wheat is suffering.
This does not necessarily mean there will be a much smaller crop. The new government support for inputs includes money to help farmers buy improved varieties with higher yield and quality potential.
Also, a lot of the crop receives some irrigation.
The USDA report notes that the crop is more vulnerable to winterkill if it is not well established before cold weather pushes it into dormancy.
Winter is the dry season in the region so the next opportunity for change is spring.
The crop is resilient and good rain in spring can revive it.
Conditions in the fall of 2001 and 2002 were drier than this year, but spring rain saved the crop and only minor production reductions were recorded, the USDA said.
But in this period of tight world stocks and intense volatility in markets, if problems in China cause the need for imports, it could offset the price-depressing effect of increased winter wheat seeding around the world and keep the wheat price rally going.
