The state continues to implement policy protection for wheat as a ration, and the minimum purchase price is steadily raised. Considering the supply and demand pattern of the wheat market and the operation of the market, it is expected that the price of wheat will remain high in 2022, and the national policy will also guide and regulate the price of wheat to remain within a reasonable range.
2021 is a very unusual year for China's wheat market, and it is also a relatively special year. Affected by the new crown pneumonia epidemic, extreme climate and surrounding markets at home and abroad, the frequency and amplitude of wheat price fluctuations are high year-on-year, especially in the second half of the year, wheat prices are strong, rising and rising, frequently refreshing the highs, so that the bottom of the market center of gravity has moved up significantly compared with the same period last year.
Market monitoring shows that at the end of December 2021, the average price of wheat in the main grain and oil markets in the country was 2835 yuan / ton, up 427 yuan / ton from the same period last year, an increase of 17.73%, and the price hit a record high during the year. The closing price of the main contract of Zhengshang Strong Wheat was 2946 yuan / ton, up 13.66% year-on-year, the largest increase in the past 11 years.
Market supply and demand may be slightly tighter than in previous years
According to the National Bureau of Statistics, the total national grain output in 2021 was 682.85 million tons, an increase of 13.36 million tons over 2020, an increase of 2%. Among them, the output of summer grain wheat was 136.95 million tons, an increase of 2.7 million tons over the previous year, an increase of 2%.
The National Grain and Oil Information Center estimates that the total domestic wheat consumption in 2021/2022 will be 145.15 million tons, a decrease of 2.11 million tons from the previous year, and there will be a gap in new supply and demand for the second consecutive year. However, it should be pointed out that the existing stock level can meet the consumption of more than one year, and the supply of wheat is sufficiently guaranteed. The USDA expects China's wheat stocks to remain at 141 million tonnes in 2021/2022, with an inventory-to-consumption ratio of 94.63%.
China's wheat production and demand gap inflection point appeared in 2020/2021, corn prices after a sharp rise led to an increase in wheat feed substitution, in 2021 toxins exceeded the standard of wheat and a large part of the flow into feed enterprises, wheat supply and demand slightly tightened, the national policy from "destocking" gradually shifted to ensure stable prices.
According to statistics, as of now, the remaining stock of wheat in the national temporary storage is about 48 million tons, down about 27 million tons year-on-year. Market participants believe that the national temporary storage of wheat stocks fell sharply, while the inventory structure improved, if the momentum of stock reduction can not be effectively controlled, the long-term market regulation and control ability or discount, and then affect the security of ration supply, wheat supply and demand although there is no near-term worry but long-term concerns. Some market participants believe that although the remaining stocks of wheat in the national reserves have decreased significantly year-on-year, they still account for more than 1/3 of the annual consumption of domestic wheat. It is certain that the current minimum purchase price wheat stocks still have absolute control over the market.
Agricultural conditions scheduling shows that affected by abnormal weather, the winter wheat autumn sowing in the main producing areas in 2021 is generally late, the sowing progress is accelerated after mid-October, and the end of November is basically over, it is understood that the sowing and growth trend are better than expected; as of mid-December, the proportion of winter wheat first and second type seedlings in the country is 23% and 77%, respectively, and the growth trend is basically normal. The delay in sowing in the early stage has caused market concerns about the germination rate of winter wheat and the growth of later stages. The market expects that the new season wheat will be sown late, coupled with the uncertain weather in the later stage, and the market speculation on wheat production may increase in the spring of 2022 compared with previous years.
The purchase and sale of wheat market is more market-oriented
In 2021, the summer grain market is very active, milling enterprises, feed enterprises, reserve enterprises and various types of traders have entered the market to buy, and the price of wheat is high. The summer harvest wheat is not only all market-oriented purchases, but also the number of centralized purchases is higher than that of the same period last year. As of September 30, 2021, the cumulative purchase of wheat in the main producing areas was 57.91 million tons, an increase of more than 3 million tons over the same period of the previous year.
The relevant person in charge of the State Grain and Material Reserve Bureau said that China's grain market has been implemented for 17 years since the implementation of the minimum purchase price policy in 2004. During the summer grain acquisition period in 2021, the purchase of the trust market was not started, and the grain acquisition was all market acquisition, which was also the first time in many years.
In 2021, the characteristics of high quality and good price in the wheat market are also more obvious. Affected by various factors such as rainfall during the harvest period and waterlogging during heavy rainfall, the summer harvest wheat market is based on quality and price, and the characteristics of the high-quality and high-price market are obvious. The purchase and sale of wheat of different qualities are different from "cold and warm", and the prices are clear. Wheat with excessive toxins is not sought after and the price is low; wheat that is not overly toxic is robbed and the price is firm. It is understood that the price of high-quality wheat in the main producing areas during the summer harvest is higher than that of wheat after rains of 0.03 to 0.08 yuan / catty, and the average price difference in the Huanghuai region of North China is more than 0.06 yuan / catty.
In 2022, the state will continue to implement the minimum purchase price policy in the main wheat-producing areas, and the minimum purchase price of wheat (third-class) produced in that year will be 1.15 yuan / catty, an increase of 0.02 yuan / catty compared with 2021. The market expects that as the price of wheat in the new year is expected to continue to run at a high level, it is expected that the probability of the market starting the minimum purchase price in the summer harvest of 2022 will still not be large (or difficult to start on a large scale), and the purchase and sale will be more market-oriented. At the same time, the pricing method of high quality and good price in the wheat market will also be obvious.
Wheat returns to staple food value
In 2020, China's corn supply is tight, prices are rising, corn and wheat prices are inverted, so that a large number of wheat into the feed field, thereby driving the wheat market purchase and sales are hot, supporting wheat prices to follow higher. In 2021, especially in the second half of the year, although wheat prices also rise frequently and continue to rise, the engine of the market is basically driven by flour companies, and the support effect of feed on the market is weakened compared with the previous year.
Since the end of December 2021, the price difference between corn and wheat in Huanghuai region of North China is -90 yuan / ton, and in South China - 160 yuan / ton, which is 485 yuan / ton and 350 yuan / ton lower than the initial listing of new wheat. The market reflects that due to the high price of wheat and the decline in corn prices, the price difference between corn and wheat has gradually returned to rationality, and some feed companies have changed their formulas to use corn. In addition, some feed companies use imported grain or use brown rice mixtures to produce feed, and the demand for wheat is also decreasing.
The National Grain and Oil Information Center estimates feed consumption and losses of 35.6 million tonnes in 2021/2022, down 2.4 million tonnes from the previous year. Market participants believe that due to the global wheat production cut, international wheat prices soared, export supply tightened in export countries, and importing countries "grab wheat" sentiment is high. Wheat as a ration, although the fundamental supply and demand of China's market is relatively loose, but the substitution of feed, people and livestock grain competition also led to a rapid decline in wheat stocks. In order to ensure the safety of rations, it is expected that wheat will gradually withdraw from the feed market in 2022 and return to the value standard of staple food.
The policy of destocking gives way to stable supply and price
According to preliminary statistics, in 2021, the total annual stocking of policy-oriented wheat in China was 69.3136 million tons, a decrease of 83.9464 million tons from the previous year; the actual trading volume was 28.7179 million tons, an increase of 5.4879 million tons year-on-year; the turnover rate was 41.43%, an increase of 26.27 percentage points year-on-year.
According to the practice of previous years, in the fourth quarter, the policy wheat auction will return to the market, and flour enterprises will mostly obtain stable grain sources from the policy wheat auction channel. In the fourth quarter of 2021, although the policy wheat auction was launched, two auctions were held in October alone, with a total of 1.052 million tons of wheat, and the actual transaction was 926,800 tons, with a turnover rate of 88.09%, and the minimum purchase price wheat auction has been suspended since then.
Due to the suspension of auctions, grain sources for grain-using enterprises can only be obtained from the circulation market, and traders have become the protagonists of wheat supply in the market. Although the supply of wheat in the circulation market is tight, the rotational sales of reserve wheat at all levels have increased compared with the same period in previous years, which to a certain extent has supplemented the temporary shortage of temporary storage wheat auction and alleviated the procurement anxiety of grain enterprises.
It is understood that the current remaining stock of wheat in temporary storage is about 48 million tons, down 27 million tons from the same period last year. Some market players believe that due to the rapid decline in the national temporary storage wheat stocks, in the case of domestic output expectations "worry" and international supply shortages, the temporary storage wheat stocks as an important means of market regulation and control will certainly be used on the blade, when to put in, the quantity, the way of delivery, the release area, etc. will be more flexible, the supply and price stability will also keep pace with the times, and the purpose of policy-oriented wheat regulation and control will shift from the past to stabilize market prices and ensure the safety of rations.
Imports are at a high level Channels tend to be diversified
In the international grain market in 2021, wheat is very eye-catching. On the one hand, wheat is an important ration, the supply chain dislocation caused by the global epidemic has not yet recovered, coupled with the rise in global inflation caused by food prices, wheat prices are high and volatile; on the other hand, the world's major wheat producing countries have reduced production, making supply tight, thus triggering a global "wheat grab" sentiment.
The latest data show that global wheat prices have risen for 6 consecutive months, the US CBOT wheat futures once rose to a nearly 9-year high, european wheat futures prices also hovered near the high of nearly 14 years, since 2021, global wheat prices have risen by 27.31%. At present, a number of international institutions predict that the global wheat supply and demand in 2021/2022 is tight, and the new season wheat production situation in major exporting countries is not good, and it is expected that international wheat prices will remain high.
Customs data show that in November 2021, China imported 750,000 tons of wheat, a year-on-year decrease of 7.2%; from January to November, the cumulative import of wheat was 8.83 million tons, an increase of 17.8% year-on-year. In the month, the FOB price of hard red winter wheat in the Gulf of Mexico (protein content 12%) was directly converted into RMB 1.23 / catty, which was 0.28 yuan / catty lower than the wholesale price of high-quality wheat producing areas; under the 1% tariff within the quota, the after-shore tax price was about 1.75 yuan / catty, which was 0.24 yuan / catty higher than the price of domestic high-quality wheat sales areas, and the price difference was 0.01 yuan / catty wider than that of the previous month.
The National Grain and Oil Information Center expects that the source countries and import varieties of China's wheat imports will become more diversified, but the rise in international wheat prices may inhibit China's imports, and China's wheat imports in 2021/2022 will be 8 million tons, a year-on-year decrease of 2.43 million tons.
Looking at the wheat market in 2021, the domestic and international environment is complex, and the market volatility has intensified. Due to the relatively obvious seasonal characteristics of wheat production, storage and consumption, coupled with the structural contradiction between supply and demand, market changes are mostly reflected in the phased market and the variety market. From the perspective of pure trade and operation, in the wheat market in 2022, in the game of forces of all parties, how to seize the market opportunities brought by seasonal fluctuations and regional supply and demand is still very necessary. (Originally published on January 11, 2022, grain and oil market newspaper A03 edition)
Source丨grain and oil market report
Total Duty 丨 Liu Xinhuan Coordinator 丨 Liu Chao Editor 丨 Congshen
