At present, the long and short factors of the wheat market are intertwined, and the market expectations are differentiated, especially the future wheat prices will rise or fall. The author believes that due to the lack of surplus grain at the grassroots level, wheat prices may still have a chance to rebound in the future, but the demand for flour is in the off-season, the reserve wheat continues to be put in large quantities, and the new wheat market period is approaching and the bumper yield is expected to be strong, which all play a role in the rise in wheat prices.
After about a month of decline, the wheat market finally "turned red" at the end of March and the beginning of April. But this round of rebound came and went in a hurry, and it returned to weak shocks after a week or so of rising. At present, the purchase price of Xinpumai in the main producing areas is 1.35~1.41 yuan/jin, up 0.01~0.025 yuan/jin from late March, and 0.005~0.015 yuan/jin in some areas in recent days. Although it has recovered from its previous lows, the road to wheat price growth has been difficult.
The rebound in wheat prices in producing areas was short-lived
Recently, affected by the limited arrival of bulk grain in the wheat market and the low level of some inventories, milling enterprises have adopted a flexible price increase strategy to promote purchases, and the improvement of reserve wheat transactions has boosted market confidence, and wheat prices in the main producing areas have stopped falling and recovered. After the inventory of milling enterprises was replenished, the pace of procurement slowed down, the phased market was under pressure again, and wheat prices returned to weak shocks.
At present, the price of Xinpumai net grain in Handan Milling Enterprise in Hebei Province is 1.37~1.38 yuan/jin, Shandong Heze is 1.38~1.40 yuan/jin, Henan Zhoukou is 1.375~1.39 yuan/jin, Jiangsu Xuzhou is 1.38~1.39 yuan/jin, Bozhou, Anhui is 1.365~1.375 yuan/jin, and some areas have a slight pullback of 0.005~0.015 yuan/jin, and the overall price in the main producing areas is still up 0.01~0.025 yuan/jin compared with late March.
According to the analysis, the current round of wheat price rise failed to last for a long time, mainly because the procurement pace of milling enterprises slowed down after a short period of replenishment, and the pressure of strong supply and weak demand in the market increased. Although there is sometimes a mismatch between supply and demand in the wheat market, the overall loose fundamentals of supply and demand have not changed. Especially in the current environment of weak demand for flour, intensive rotation of reserves at all levels, and good production conditions in the new season, the enthusiasm of enterprises to raise prices and purchase is not high, and the momentum for wheat prices to continue to rise is obviously insufficient.
Reserve rotation wheat transactions have improved
According to the market, due to the small circulation of bulk grain in the wheat market and the rise in wheat prices in the market, the enthusiasm of some manufacturers to participate in the auction of policy grain has increased recently, and the turnover rate of central and local reserve wheat has increased, and some have seen a slight premium. With the rise in the wheat market, reserves at all levels have also taken advantage of the situation to increase selling. According to statistics, last week (April 1 to 7), the cumulative auction volume of wheat in the central reserve was 728383 tons, and 533565 tons were traded, with a turnover rate of 73.25%.
On April 1, China Grain Reserves Shandong Branch sold 76,441 tons of wheat from 2020 to 2023, with a turnover of 75,441 tons, with a turnover rate of 99%, a floor price of 2,700~2,800 yuan/ton, a transaction price of 2,700~2,795 yuan/ton, an average transaction price of 2,734 yuan/ton, and an average premium of 15 yuan/ton; ton, the transaction price is 2710~2775 yuan/ton, the average transaction price is 2738 yuan/ton, and the average premium is 23 yuan/ton.
On April 2, China Grain Reserves Beijing Branch sold 77,043 tons of wheat at auction, and the actual transaction was 73,143 tons, with a turnover rate of 95%, an average transaction price of 2,705 yuan/ton, and a premium of 22 yuan/ton, and Anhui Branch planned to sell 15,422 tons of first-class wheat in 2020, all of which were sold, with an average transaction price of 2,754 yuan/ton and a premium of 8 yuan/ton.
On April 3, Anhui provincial reserve wheat auction sales in 2020 and 2021 produced 38,446 tons of wheat, the actual transaction of 27,147 tons, the turnover rate of 70.61%, the highest price of 2,680 yuan/ton, the lowest price of 2,640 yuan/ton, the average transaction price of 2,654 yuan/ton, Shandong Liaocheng reserve auction sales of 1,303.5 tons of first-class white wheat in 2021, all transactions, the lowest price of 2,720 yuan/ton, the highest price of 2,730 yuan/ton, and the average price of 2,725 yuan/ton.
On April 7, the local reserve wheat in Shiyan City, Hubei Province sold 2,579 tons of third-class mixed wheat in 2020, and 1,700 tons were traded, which were traded at the reserve price of 2,600 yuan/ton and 2,580 yuan/ton respectively.
It is also understood that the auction turnover rate of temporary storage wheat in Xinjiang increased last week. On April 3, Xinjiang put 19,978 tons of temporary storage wheat from 2015 to 2017, with a turnover of 11,994 tons, a turnover rate of 60.04%, and only 0.64% in the previous period, with an average transaction price of 2,416.78 yuan/ton.
Consumption in the end market is still dominated by rigid demand
Entering April, flour consumption ushered in the off-season, manufacturers had fewer new orders, flour shipments were slow, and the operating rate remained low. Although wheat prices have bottomed out in recent days, flour prices are mostly weak and stable. At present, the ex-factory price of special flour of milling enterprises in the main producing areas is 3270~3320 yuan/ton, which is basically the same week-on-week.
The recent performance of the breeding industry is average, the bran demand of feed enterprises is poor, especially the corn and soybean meal market is low, the import substitution grain source is sufficient, and the grain flour and overdue low-price rice are more, although the operating rate of the flour enterprises is not high, the bran output is not much, but the price continues to fall weakly. At present, the ex-factory price of bran in the main producing areas is 1460~1540 yuan/ton, down 80 yuan/ton week-on-week.
After entering the second quarter, the flour market consumption has basically entered the seasonal off-season, especially as the weather warms, flour is not easy to store, and dealers are more cautious in taking goods. Due to the pressure on the downstream products of the milling industry, the profits of enterprises are poor, and most of them maintain daily operation. This is also the reason why many flour enterprises have low raw grain inventories, but they are still not active in wheat purchases, after all, the downturn in the product side limits the demand for wheat from flour mills to a large extent.
It is understood that the recent corn spot in Northeast China has maintained a sideways trend, and the price in the Huanghuai region of North China is weak. At present, the mainstream price of wheat in Shandong enterprises is 1.35~1.41 yuan/jin, and the mainstream price of corn is 1.15~1.24 yuan/jin, and the price difference is 0.17~0.20 yuan/jin (that is, 340~400 yuan/ton). From the point of view of price comparison, the cost performance of wheat feed substitution is still missing.
The market's attention to Xinmai continues to increase
On April 4, the remote sensing growth monitoring of winter wheat showed that the proportion of the first and second types of seedlings in the main producing provinces was 94.5%, and the proportion of the first and second types of seedlings in the provinces was more than ninety, and the overall growth was good. It is understood that after entering April, the growth of wheat in the new season has basically entered a critical period of yield and quality, and the impact of weather will be more obvious.
In the rotation sales of reserve wheat at all levels, the proportion of two-way transactions between purchase and sale has increased, and the turnover rate is at a high level, and one-way procurement has further increased. Recently, the transaction price in the producing area fluctuated between 1.32~1.36 yuan/jin, indicating that the market basically recognized this price, and the price of new wheat was expected to be 2600~2700 yuan/ton (that is, 1.30~1.35 yuan/jin).
On April 2, China Grain Reserves Henan Branch held a two-way bidding transaction for wheat purchase and sales, with a volume of 53,000 tons, a turnover rate of 100%, an average transaction price of 2,746 yuan/ton, a purchase of 2,684 yuan/ton, and a purchase and sale price difference of 62 yuan/ton, and a volume of 14,500 tons, a turnover rate of 86%, an average transaction price of 2,785 yuan/ton, a purchase of 2,716 yuan/ton, and a purchase and sale price difference of 69 yuan/ton.
From April 2nd to 3rd, Shandong Land Reserve tendered and purchased 12,500 tons of non-rain wheat in 2024, with a transaction of 0.75 tons, a turnover rate of 60%, a transaction price of 2675~2700 yuan/ton, and an average transaction price of 2687 yuan/ton.
On April 3, China Grain Storage Guangdong Branch bid to purchase 5,800 tons of wheat in 2024, all of which were traded, with a floor price of 2,800 yuan/ton, a transaction price of 2,700 yuan/ton, and a discount of 100 yuan/ton.
The wheat market is expected to diverge significantly
The National Grain and Oil Information Center estimated in April that the new supply of wheat in 2023/2024 will be 145.89 million tons, the total consumption will be 136.12 million tons, and the balance between supply and demand will be 9.77 million tons, a year-on-year decrease of 12.91 million tons, but there is no shortage of grain as a whole. At present, the wheat market is intertwined with long and short, and the market expectation is more obvious.
There is a view that at present, the grain stocks at the grassroots level have basically bottomed out, the grain stocks of channel traders are gradually decreasing, and some grain-holding entities have the mentality of being short of grain in the gambling stage, and the bullish mentality of holding grain is relatively strong, and some plan to wait until the green and yellow crops are not available before selling.
There is also a view that there are many obstacles to the rise in wheat prices, and the market outlook is weak and volatile or still the mainstream of the market. If there is no long-term plan to raise prices, it may be a better choice for some grain-holding entities to clear their warehouses one after another.
It has been less than one and a half months since the new season wheat was put on the market in Hubei, and the current wheat market is intertwined with long and short factors. Although there is not much surplus grain at the grassroots level at present, the country's wheat stocks are abundant, and it is difficult for the market to have a shortage of grain. It is expected that the wheat market in the future may still maintain a low-level shock trend, and the range of up and down fluctuations is limited. (This article was originally published in the A03 issue of Grain and Oil Market News on April 9, 2024)
Source丨Grain and oil market newspaper
General Duty丨Liu Xinhuan Editor丨Congshen
