Wheat Crop Conditions in China Seen Improving, Curbing Import Requirements

Wheat-crop conditions are improving in China, the world’s largest grower, cutting the risk that the country may need to increase imports after drought hit producing areas, Rabobank International said.

“China will remain self-sufficient in terms of wheat supply,” said Lief Chiang, a Rabobank analyst based in Shanghai. Trade will be limited and most imports will be the high-protein variety, he said in an e-mailed response to Bloomberg questions.

Wheat climbed 73 percent in the past year and advanced to the $9.1675 a bushel on Feb. 14, the highest level since August 2008, on concern the worst drought in 60 years would cut winter- wheat production in China, draining global inventories. The country, also the top consumer, bought 116,000 metric tons from the U.S. in the week to March 17, the most for any week since July 2005, according to the Department of Agriculture.

The summer wheat harvest in China may increase from last year and beat the average of the past five years after rain and irrigation eased drought, the Ministry of Agriculture said.

About 86 percent of wheat seedlings surveyed at the end of last month could be rated so-called Class 1 or Class 2, Director of Planting Ye Zhenqin said in a report dated April 3 on the ministry’s website. Last year’s proportion of good seedlings was 82.9 percent, according to Ye.

Greening Phase

Planted area increased “slightly” from last year, Ye said, without giving numbers. Crops, in the greening phase of growth after the winter hibernation, are also in better condition than the average of the past five years, Ye said.

Some 5.16 million hectares out of a total of 14 million hectares in the wheat regions were hit by drought, the United Nations Food & Agriculture Organization said in February.

Improving crop conditions may eliminate the possibility the country will boost imports. The jump in prices has prompted farmers in the U.S., the largest exporter, to boost plantings by 8.2 percent to an estimated 58.02 million acres this year.

“We’re not expecting a crop crisis in wheat in China,” Jay O’Neil, a senior agricultural economist at the International Grains Program of the Kansas State University, said in a phone interview today. “I would expect some Chinese imports of high- quality milling wheat, but not a big amount, not something that surprises or scares the market.”

Wheat Imports

O’Neil, in the grain business for 37 years and adviser to the U.S. Grains Council, said he met feed millers during a visit to China three weeks ago. Wheat imports may be little changed at 1.5 million tons, he said. About 75 percent to 80 percent of the areas are irrigated, capping losses, O’Neil said.

The area affected by pests in wheat-growing regions climbed 15 percent from a year earlier to 143 million mu (9.5 million hectares), the Ministry of Agriculture said March 30. The country will step up efforts to keep losses from pests and disease at less than 5 percent this year, a statement said.

“The occurrence of pests, especially aphids, in the wheat fields is the natural outcome” of the drought, Chiang said. “With the appropriate application of pesticide and fungicide, the negative impact should be limited.”

July-delivery wheat in Chicago gained 0.4 percent to $8.2575 a bushel at 5:54 p.m. in Singapore today.

--William Bi. Editors: Matthew Oakley, James Poole

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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