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Nine Year High for Chinese Wheat Imports

31 December 2013

CHINA - China's wheat imports are expected to hit a nine-year high in 2013, as the country continues to turn to the international market to meet a surging demand for the grain for use in high-protein foods, animal feed, industry and processed goods.

Customs data show that China imported 970,000 tonnes of wheat from the US, France, Canada, Australia and Kazakhstan in November, a whopping 721 per cent increase over the same month last year.

The US was the biggest exporter last month, shipping 772,327 tonnes of wheat to China.

Hu Zengmin, an analyst with the China National Grain and Oils Information Centre, said that although China has experienced a decade of stable grain production growth, rising demand for feed and industrial applications has put a dent in China's grain self-sufficiency since 2009 and whetted the nation's appetite for wheat from the global market.

Boosted by the booming animal feed and food-processing sectors, the demand for both wheat and corn has surged in the past decade. More than 120 million tonnes of corn and 10.7 million tonnes of wheat were consumed by Chinese livestock in 2012, while food-processing manufacturers used 21 million tonnes of wheat, up nine per cent year-on-year.

Not all of the processed wheat and corn is consumed domestically. China produced 190 million tonnes of animal feed for export last year, up 5.5 per cent from the previous year. The feed was sold to countries that included Mongolia, Ukraine, Australia and New Zealand.

But spring frosts and wet weather in May and June took a toll on China's output in the wheat-producing provinces of Henan, Anhui, Jiangsu and Shaanxi this year, Hu said.

The CNGOIC estimated that China's wheat output this year likely will total 118 million tonnes, down 2.6 million tonnes from 2012.

China purchased 5.12 million tonnes of wheat from the world market between January and November this year, a 39 per cent rise in demand from the same period last year.

Its wheat imports nearly tripled to 3.68 million tonnes in 2012 compared with the previous year, according to the General Administration of Customs.

To keep the staple food supply and demand in balance, the Chinese government set a new goal earlier this week that it must maintain a self-sufficiency rate of 95 per cent for grains, including rice, wheat and corn. For rice and wheat, the self-sufficiency rate should be even higher to ensure absolute safety of the domestic food supply.

However, the nation's surging wheat imports have caused some consternation that China's deepening reliance on the international market may hike global wheat prices in 2014.

Li Guoxiang, deputy director of the rural development institute at the Chinese Academy of Social Sciences, said that in comparison with the Republic of Korea and the United Kingdom, China's expenditures on grain imports equal only three per cent of its foreign currency spending at the moment, which is lower than the international level.

"Currently, the supply of staple grain is in a relatively surplus position in the world market," Li said. The slightly lower self-sufficiency rate and higher wheat imports do not mean that the country's grain security is being threatened by declining domestic wheat output, he said.

Higher Domestic Prices

"Pushed by fixed government minimum purchase prices, soaring labour and fertiliser costs, the price of Chinese wheat is set higher than international prices," said Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences.

According to the US Department of Agriculture, the average US wheat price was $280 per tonne on Tuesday, compared with $441 per tonne at China's Zhengzhou Commodity Exchange

The CNGOIC adjusted up its previous forecast of China's wheat imports from 7.5 million tonnes to 8 million tonnes for the 2013-14 crop year.

Ding said China also is selling flour and processed products, like flour, noodles, biscuits and bread, to countries such as Thailand, Vietnam, the Democratic People's Republic of Korea and Mongolia. COFCO, China's largest food processor, manufacturer and trader, is the only Chinese company tasked with exporting wheat and related products.

Thanks to a well-developed food-processing industry, China exported 157,703 tonnes of flour to the Democratic People's Republic of Korea and 338,000 tonnes of flour to Mongolia in 2012, according to a report by the Chinese Academy of Agricultural Sciences.

TheCropSite News Desk

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