Due to the drought-induced reduction in wheat production, global wheat prices continue to run at a high level. As of 16:00 on August 18, the main contract price of US wheat futures was 727 cents per bushel. Last Friday (August 13) broke through 780 cents per bushel, setting a new high since February 2013.
Since the beginning of this year, the price of wheat in the international market has generally shown a volatile upward trend. According to data from the International Grain Council (IGC), wheat export prices have risen by 46% this year. The root cause of the sharp rise in prices is that Russia, the United States and Canada, the main wheat producing countries in the world, have all suffered the impact of extreme dry weather, which has affected wheat production and thus export expectations.
Wheat is a globally grown crop with a wide range of producing countries. In 2020, the total global wheat production will be 776 million tons. Among them, China is 132 million tons, accounting for 17%; Russia is 85 million tons, accounting for 11%; the United States is 60 million tons, accounting for 6.4%. Among the global wheat exporting countries, Russia and the United States are the top two countries in terms of export volume. In addition, although wheat production in Canada, Australia, and Ukraine do not account for a high share in the world, they account for a high share of global wheat exports.
From a global perspective, major wheat-producing countries/regions such as Russia, the United States, and Canada have suffered varying degrees of production cuts, boosting wheat prices.
According to the report of the US Department of Agriculture in August, Russia’s wheat production will decrease by 12.85 million tons from the previous year, a decrease of 15.1%. Affected by this, Russian exports will decrease by 3.5 million tons, a decrease of 9.1%; the US spring wheat harvest will drop by 41% year-on-year , The lowest output in 33 years, and the U.S. wheat export volume will also slightly decline; Canada’s wheat output will decrease by 11.18 million tons compared with the previous year, a decrease of 31.8%, affected by this, Canadian exports will decrease by 10 million tons. The margin is 36.4%.
Although China’s wheat production is among the highest in the world, it is still inseparable from imports. In 2020, China’s dependence on wheat imports will reach 6.4%. It was also in this year that wheat imports hit a record high, reaching 8.38 million tons, an increase of 140.2% year-on-year, and the import volume was equivalent to 87% of the annual quota of 9.64 million tons. Since the beginning of this year, China’s wheat imports are still increasing. In the first seven months of 2021, wheat imports amounted to 6.23 million tons, a year-on-year increase of 45.6%.
Zhang Zhixian, deputy dean of the China Food Net Yida Research Institute, told CBN reporters that under the current uncertain epidemic and the external international environment, wheat imports are expected to further increase in 2021, reaching 9 million tons. The same increase in volume and price will lead to an increase in the cost of China’s imported wheat.
Zhang Zhixian believes that since 2020, the increase in the number of wheat imports, except for a part of the variety adjustment, a considerable proportion of imports are strategic imports, which are preventive strategies under special circumstances.
From the perspective of domestic wheat prices, since 2006, China has been implementing the minimum purchase price purchase policy and auction policy for wheat. Although wheat production conditions and other factors also affect the wheat market, the policy has basically dominated the domestic wheat price for a long time.
From the perspective of wheat production in recent years, with the exception of the severe reduction in production in 2018, the overall harvest of wheat in other years was generally bumper, and the quality of wheat in some years was affected. From the perspective of wheat price trends in recent years, starting from 2018, the country has lowered the minimum wheat purchase price for two consecutive years. Affected by this, wheat prices once showed a relatively low operation, but they are still supported by the wheat minimum purchase price.
From the perspective of summer grain production in 2021, the country has a bumper harvest of summer grain, with a total output of 145 million tons, a year-on-year increase of 2.1%. Zhang Zhixian mentioned that although this year’s wheat production is also a good harvest year, the increase in corn prices has led to changes in the price difference between wheat and corn. Domestic consumption of forage wheat has increased significantly, coupled with changes in the external environment such as the epidemic. , The domestic wheat price showed a significant upward trend, and it is currently in a high and volatile stage.
Lin Guofa, research director of Breck? Agricultural Products Collection Network, told CBN that since August, due to the repeated occurrence of the new crown epidemic in some areas and the impact of previous rainstorms and other factors, wheat prices have risen steadily. This round of rise is mainly the wheat before the rain. After the rain, the wheat with excessive vomitoxin are still difficult to rise. At present, because the price of wheat is still slightly lower than that of corn, the country is fully capable of guaranteeing the supply of wheat in the context of a relatively abundant grain market.
He mentioned that Henan, as the main domestic high-quality wheat producing area, had all winter wheat harvested before the flood, which would not affect the yield, but it may cause the wheat in some farmers’ homes to be soaked or damp, and mycotoxins increased. These soaked corn can only be used for feed, especially waterfowl feed.