China’s wheat crop likely won’t be as good as what the U.S. Department of Agriculture is forecasting, says the CWB.
The USDA is predicting a near record 121 million tonnes of production.
“My read is that they’re overestimating (China’s) productive capacity,” said Neil Townsend, director of CWB Market Research.
He recently returned from touring crops in Henan, Shandong and Hebei, three Chinese provinces responsible for two-thirds of China’s annual wheat production.
“Some of it looked good and some of it looked a little worse,” said Townsend.
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And then just as he was leaving China, the country received heavy rainfall in the southern part of the wheat belt that may have caused damage.
“It lodged the wheat so there is potential for some acres wiped out and some lower yields in about 20 percent of the wheat area,” he said.
A region from eastern Sichuan to Shandong received 51 to 127 millimetres of rain over a two day period, according to Drew Lerner, president of World Weather Inc.
“That’s just a lot of rain,” he said.
“From a wheat perspective, it’s right across the heart of the production region.”
Lerner thinks the rain may have caused quality problems in parts of China’s winter wheat crop. However, it was positive for summer crops because the region had been dry before the moisture arrived. Many Chinese growers plant corn immediately following wheat.
Townsend said China’s harvest starts in the south of the wheat belt and works its way north. Chinese farmers grow red winter wheat, but 95 percent of it would be considered between a soft red wheat and a hard red wheat.
Harvest was underway in Henan when Townsend visited last week. Crops were four to six weeks away from coming off in the northern portion of the wheat belt.
“The heavy rains were in the southern part of Henan, which is the biggest wheat production state,” he said.
The moisture likely caused damage in neighbouring Anhui.
“I wouldn’t be surprised if (China’s) imports start ratcheting up,” he said.
China recently bought 650,000 tonnes of U.S. wheat. The Chinese government has also increased domestic support prices for the crop. Townsend sees those two moves as a signal that the country expects to be short of wheat.
He thinks China, which is the world’s largest wheat producer, could import 500,000 to one million tonnes more than the USDA’s estimate of 3.5 million tonnes for 2013-14.
China is a sporadic buyer of Canadian wheat but can be a huge customer when it needs foreign supplies.
For instance, it bought 2.8 million tonnes of Canadian wheat in 2004 but a few years later bought nothing.
“They definitely prize the western Canadian spring wheat for blending and milling purposes,” said Townsend.
He expects China to become a more consistent customer in the future, buying one million tonnes a year or more depending on local production.
